Market Timing And Capital Structure Choice In Emerging Markets

<p style="text-align: justify;">In the paper, we investigate the impact of market timing on capital structure of firms from the leading emerging markets, namely China, Thailand, Malaysia, South Korea, and Taiwan, during the period from 2008 to 2013. Based on existing approaches to measuring the degree of market timing impact on capital structures choice, we identify the model specification, which succeeds in detection of market timing patterns in capital structure choice of companies from the selected emerging markets. The results provide evidence of the fact that companies followed the market timing strategy on the horizon of two years after 2008 influencing the capital structure in 2013. In the long-term horizons, there is no sufficient evidence of market timing strategies to be followed by these companies. Therefore, we draw the conclusion that market timing can be used in emerging markets for capital structure management. On the side, there is no sufficient evidence that the country factor or common trends in capital structure policies are presented within capital structure management of companies from the sample.</p><p style="text-align: justify;"><strong>Key words: </strong>market timing, emerging markets, capital structure</p>