Korean J Financ Stud Search

CLOSE


Korean Journal of Financial Studies 2016;45(2):209-245.
Published online April 30, 2016.
Testing the Market Timing Theory of Capital Structure: the Effect of Controlling Shareholders
Jaeuk Khil, Yu Kyung Lee, Eun Jung Lee
한국 기업의 자본조달과 마켓타이밍에 관한 연구
길재욱, 이유경, 이은정
Abstract
This paper examines market timing in equity issuance of the listed companies controlled by large shareholders in Korea between 1993 and 2011. The controlling shareholders have incentives to issue the shares when the stock price is overvalued, since the overall value of the controlling shareholders increases. However, this argument is particularly true in cases of equity issuance with dilution of the controlling shareholder. In this paper, we examine return predictability after equity issuance based on the ownership of the controlling shareholders. We find that returns following issuances are poor, which supports market timing theory, only when the controlling shareholder`s stake is reduced. We argue that it is another form of opportunistic behavior by controlling shareholders in Korea. In addition, we find an increase of market timing behavior of the controlling shareholders when the firm has severe information asymmetry and there is the irrationality of investors. Finally, taking into account the corporate governance, we also find an increase of opportunistic behavior of the controlling shareholders when the firm has weak corporate governance.
Key Words: 마켓타이밍이론,자본구조,정보비대칭,지배주주,투자자의 비합리성,Capital Structure,Controlling Shareholder,Corporate Governance,Information Asymmetry,Market Timing Theory
TOOLS
Share :
Facebook Twitter Linked In Google+ Line it
METRICS Graph View
  • 568 View
  • 16 Download
Related articles in Korean J Financ Stud


ABOUT
BROWSE ARTICLES
EDITORIAL POLICY
FOR CONTRIBUTORS
Editorial Office
6F, Korea Financial Investment Association Building
143, Uisadangdaero, Yeongdeungpo-gu, Seoul 07332, Korea
Tel: +82-2-783-2615    Fax: +82-2-783-6539    E-mail: office@e-kjfs.org                

Copyright © 2024 by Korean Securities Association.

Developed in M2PI

Close layer
prev next