tailieunhanh - The impact of market timing on capital structureevidence from Vietnam construction industry

The purpose of this study is to test how equity market timing affects capital structure from the Initial Public Offering(IPO) perspective. The author use Ordinary Least Square(OLS) technique to analyze a data-set of 102 Vietnamese enterprises in the construction industryfor the period from 2006 to 2014. | TẠP CHÍ KHOA HỌC ĐẠI HỌC ĐÀ LẠT Tập 7, Số 1, 2017 55–77 55 THE IMPACT OF MARKET TIMING ON CAPITAL STRUCTURE: EVIDENCE FROM VIETNAM CONSTRUCTION INDUSTRY Nguyen Huu Thaoa,b* b a The Faculty of Banking and Finance, Thuongmai University, Hanoi, Vietnam Department of Finance, Waikato Management School, Waikato University, New Zealand Article history Received: September 08th , 2016 | Received in revised form: November 08th, 2016 Accepted: November 16th, 2016 Abstract The purpose of this study is to test how equity market timing affects capital structure from the Initial Public Offering (IPO) perspective. Using Ordinary Least Square (OLS) technique to analyze a data-set of 102 Vietnamese enterprises in the construction industry for the period from 2006 to 2014, we conclude that, in the short-term, the impact of equity market timing on capital structure is relatively low. Whereas, in the long-term, the impact of equity market timing on capital structure is more obvious. Keywords: Capital structure; IPO; Market timing; Vietnam. 1. INTRODUCTION Determining the capital structure to get the best performance for any business is a controversial issue to decide nowadays. Moreover, the policy of increasing capital plays an important role in improving the corporate value. In fact, financing source rise by debt to create tax shields but it also restricts business opportunities and investment business. In addition, the second advantage is that debt, in general, is less expensive than equity. Thus, the suitable capital structure shows an important role in every firm. Luigi and Sorin (2009) defined market timing of capital structure to be the time when companies chose to issue equity. More specifically, when the stock price was overvalued, the company would issue new shares and vice versa. Market timing is one of the most important factors affecting financial decisions of corporation managers. Henriksson and Merton (1981) used parametric and non-parametric to evaluate the .