| Summary: | 碩士 === 國立彰化師範大學 === 商業教育學系 === 94 === This paper examines the capital structure implications of market timing, and investigates the relationship between market timing and capital structure of the electronic industry in Taiwan. For using a single major financing event, the initial public offering and identifying hot and cold markets based on the monthly IPO volume. The need to isolate market timing is also important in analyzing its long-term effects on leverage.
Equity market timing is one of the primary factors that shape corporate financing decisions. Firms have a tendency to issue equity when the cost of equity capital appears to be temporarily low. Most tests of market timing are based on the positive relationship between firms' market valuations and their equity issues. Other factors that affect financing policy are likely to contribute this relationship. To answer quantitative questions about market timing, market timing measure should not be controlled with other determinants of financing policy. Hence, the IPO sample is likely to be pure market timing motives that are distinct from long-range financing policy requirements.
Further tests regarding that hot-market IPO firms issue substantially more equity, and lower their leverage ratios more than cold-market firms do. After going public, hot-market firms increase their leverage ratios by issuing more debt and less equity relative to cold-market firms. By the end of the two years after IPO, the impact of market timing on leverage vanishes.
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