Earticle

초록

영어

Previous studies have documented that firms’ efforts to time equity issuance based on the market sentiment significantly affect their capital structures while pursuing long term targets for leverage and credit ratings. In this paper, we examine whether in the short term, firms adjust their capital structure in response to changes in underlying risk. We find that firms engage in risk timing in the sense that firms try to lower their leverage ratios by issuing equities when risks are high and vice versa. Using various measures of risks including equity volatility, idiosyncratic risk and measures of financial distress and operating risk, we present evidence that is consistent with the risk timing behavior after controlling for various factors that are known to affect firms’ capital structure decision. Managers are found to time capital structure decisions to the benefit of their firms by taking advantage of favorable market conditions as well as maintaining an appropriate risk level. And while market timing benefits the firm at the expense of uninformed investors, these investors receive benefits from managerial risk timing. Finally, we find that firms not only have long term targets for leverage, but also residual fluctuation around these targets that is consistent with the trade-off theory.

목차

Abstract
 I. Risk Timing of Capital Structure Adjustments
  A. Timing and Risk as Determinants of Capital Structure
  B. Measures of Risk and Timing
 II. Data and Methodologies
  A. Leverage Ratio, External Financing, Valuation and Control Variables
  B. Risk Measures
  C. Timing Measures
  D. Regression Analysis
 III. Empirical Results
  A. Summary statistics
  B. Correlation structure
  C. Main Findings
  D. Further Robustness Checks
 IV. Conclusion and Extensions
 Appendix
 Reference
 Table

저자

• Martin J. Dierker [ Korea Advanced Institute of Science and Technology (KAIST) ]
• Jun-Koo Kang [ Nanyang Technological University of Singapore ]
• Inmoo Lee [ Korea Advanced Institute of Science and Technology (KAIST) ]
• Sung Won Seo [ Korea Advanced Institute of Science and Technology (KAIST) ]

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간행물

표지보기 관심저널 등록

• 간행물명

  한국재무학회 학술대회

• 간기

  부정기

• 수록기간

  2006~2024

• 십진분류

  KDC 325 DDC 330