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for the hypothesis is mixed. On the one hand, current capital structure appears strongly related to historical market values, suggesting that "capital structure is the cumulative outcome of past attempts to time the equity market". On the other, studies show that the effect of market timing
124:. Further, the (standard version of) the hypothesis is said to be somewhat incomplete as relates to theory. Beyond empirical study, as alluded to, a model is needed to explain why at the same moment in time, some firms issue debt while other firms issue equity.
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as to whether they finance with debt or equity, choosing the form of financing, which, at that point in time, seems to be more valued by
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disappears after as little as two years. In particular, "the impact of market timing on
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completely vanishes", with debt issued following equity financing during earlier
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at low prices, the intention is to exploit temporary fluctuations in the
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literature. Here, it does not attempt to explain why there would be any
213:"How Persistent Is the Impact of Market Timing on Capital Structure?"
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More generally, the
Hypothesis is classified as part of the
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Dividend policy Ā§ Dividend signaling hypothesis
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134:Corporate finance Ā§ Capitalization structure
31:decide whether to finance their investment with
232:"Timing Stock Market is Impossible! But Why?"
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185:Malcolm Baker and Jeffrey Wurgler (2002).
164:Outline of corporate finance Ā§ Theory
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187:"Market Timing and Capital Structure"
154:Capital structure substitution theory
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69:; it is often contrasted with the
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67:such corporate finance theories
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230:Pai, Rakshith (2022-02-21).
106:Efficient-market hypothesis
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149:ModiglianiāMiller theorem
21:market timing hypothesis
79:first order determinant
218:The Journal of Finance
192:The Journal of Finance
60:other forms of capital
139:Pecking order theory
71:pecking order theory
41:equity market timing
39:instruments. Here,
81:of a corporation's
47:at high prices and
199:2007-09-29 at the
122:hot equity periods
113:empirical evidence
98:behavioral finance
65:It is one of many
262:Corporate finance
211:A. Alti. (2006).
91:financial markets
83:capital structure
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272:Finance theories
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144:Trade-off theory
102:asset mispricing
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239:. Retrieved
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49:repurchasing
29:corporations
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87:indifferent
256:Categories
241:2022-03-04
170:References
197:Archived
128:See also
118:leverage
73:and the
35:or with
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33:equity
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267:Debt
111:The
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