The Financing Decisions and Managerial Market Timing Evidence from Tehran Stock Exchange

Document Type : Research Paper

Authors

1 Tarbiat Modares Universit

2 university of Ilam

Abstract

Managerial financing decisions seem to change the predictions of the financial model about how often and under what circumstances firms use financial resources. The financial accounting literature uses market timing hypothesis, pecking order theories to explain management’s financing decision. We examine how market timing affects management’s net financing decision using a sample of firms listed in Tehran Stock exchange over the period of 2002 to 2011. Our results do not provide support for the market timing hypothesis. We also find a negative association between net financing and firms’ market return suggesting a negative impact of the net financing decision on firms’ return. Our results show no association between initial public offering and firms’ market return. This suggests that a suitable market return did not appear in initial public offerings. The findings also show that firms with an ability of using internal resources in its capital structure are more likely to perform well than expected in the capital market.

Keywords

Main Subjects


[1]  ایزدی‌نیا، ناصر؛رحیمی‌دستجردی، محسن. (1388). تاثیر ساختار سرمایه بر نرخ بازده سهام و درآمد هر سهم،تحقیقات حسابداری،1 (3):161-136
[2]  باقرزاده،سعید. (1382).تبیین الگوی ساختار سرمایه شرکت های پذیرفته شده در بورس اوراق بهادار تهران، پژوهش­های مالی،1:23-48
[3]  خانی، عبداله؛ افشاری، حمیده؛ حسینی، میرهادی. (1392). آزمون تصمیمات تامین مالی، زمانبندی بازار و سرمایه گذاری واقعی در بورس اوراق بهادار تهران، مدیریت دارایی و تأمین مالی،1 (1): 109-122
[4]  کردستانی، غلامرضا؛پیرداوری، طناز.(1391).ساختار سرمایه، آزمون تجربی نظریه زمانبندی بازار، دانش حسابداری، 3 (9):142-123
[5]  نصیرزاده،فرزانه؛مستقیمیان،علیرضا.(1389). آزمون نظریه­های ساختار سرمایه توازی ایستا (مصالحه ایستا) و سلسله مراتبی در شرکت‌های پذیرفته شده در بورس اوراق بهادار، پیشرفت­هایحسابداری،2: 133-158
[6].    Acharya, A. H. Almeida, and M. Campello. (2007) Is Cash Negative Debt? Ahedging Perspective on Corporate Financial Policies. Journal of Financial Intermediation, 16, 515-554.
[7].    Admandia R. (2013). Q Comparison BetweenTiming and Pseudo Timing, Journal of Business Finance &Accounting,37(5-6), 612–647.
[8].    Hegab B.C. (2009).External Financing: Market Timing or Magerial Optimism, A Dissertation Presented In For The Degree Doctor of Business Administration - Finance, College of Business Louisiana Tech University.
[9].    Hovakimian, A., G. Hovakimian and H. Tehranian. (2004). Determinants of Target Capital Structure: The Case of Dual Debt and Equity Issues, Journal of Financial Economics, 71,517-540.
[10].  Jensen, Michael C. And William H. Meckling. (1976). Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure. Journal of Financial Economics3(4):305-360.
[11].  Kevin K. Li.(2008). Expected Holding of Cash, Future Performance and Stock Return, Working Paper, University of Toronto.
[12].  Leary, M.T. And M.R. Roberts. (2005). Do Firms Rebalance Their Capital Structures? Journal of Finance, 60(6), 2575-2619.
[13].  Lemmon M L. and Zender J. F. (2010). Debt Capacity and Tests of Capital Structure Theories., 45(5), 1161-1187.
[14].  Lewis, Craig M. and Tan, Y. (2014).Debt-Equity Choices, Growth Options and Market Timing, Working Paper,Owen Graduate School of Management, Vanderbilt University,United States.
[15].  Loughran, T. And Ritter, J.R. (1995). ‘The New Issues Puzzle’, Journal of Finance, 50, 23-51.
[16].  Malmendier, U. G. Tate, J. Yan. (2011). Overconfidence and Early-Life Experiences: The Effect of Managerial Traits on Corporate Financial Policies, Journal of Finance, 66(5), 1687–1733.
[17].  Mikkelson, W., and M. Partch. (2003). Do Persistent Large Cash Reserves Hinder Performance? Journal of Financial And Quantitative Analysis32( 2),275-294
[18].  Modigliani, F and Miller, M.H. (1958). The Cost of Capital,Corporation Finance and The Theory of Investment, AmericanEconomical Review, 261-297.
[19].  Modigliani, F. And Miller M. H. (1963). Corporate Income Taxes And The Cost of Capital: A Correction, American Economic Review, 53: 433-443
[20].  Myers, S. C. (2001). Capital Structure,The Journal of Economic Perspectives, 15(2);81-102.
[21].  Myers, S. C. And Majulf, N. S.(1984). Corporate Financing and Investment Decisions When Firms Have Information That Investors Do not Have, Journal ofFinancial Economics, 13,187-221
[22].  Neck H. M. (2001). Firm Growth Following The Initial Public Offering: The Impact of Organizational Slack on the Productive Opportunity of High-Technology Entrepreneurial Firms, University of Colorado at Boulder, DissertationsPublishing,No3034333.
[23].  Richardson S. (2006).Over-Investment of Free Cash Flow, Review of Accounting Studies,11(2-3),159-189
[24].  Richardson S. A. And Sloan R. G. (2003). External Financing And Future Stock Returns, Working Paper, The Rodney L. White Center For Financial Research,Wharton School,University of Pennsylvania, Philadelphia.US.
[25].  Schultz,P.(2003).‘Pseudo Market Timing and TheLong-Run Underperformance of Ipos’, Journal Of Finance, 58(2); 483-518.
[26].  Simutin, M. (2010). Excess Cash and Stock Returns. Financial Management, 39)3(: 1197 1222.
[27].  Sloan R.G., Scott A. R. (2003) External Financingand Future Stock Returns, the Rodney L. White Centre for Financial Research University of Pennsylvania, Philadelphia,USA.
[28].  Sodjahin, William R.(2013) Change in Cash-Holding Policies and Stock Return Predictability in the Cross Section, Financial Analysts Journal69(1).
[29].  Wang Chih-Yung, Yu-Fen Chen, Chia-Wen Yu.(2013), Managerial Optimism and Post-Financing Stock Performance in Taiwan: A Comparison of Debt and Equity Financing, Economics Letters, 119(3), 332-335.
[30].  Welch L. (2004).Capital Structure and Stock Returns, Journal of Political Economy, 112(1), 106-131.
[31].  Van Horn, J.C., (1995).Fundamentals of Financial Management, Practice Hall, 9th Edition.