Equity Market Price and Its Effect on Capital Structure and Equity Issue

miswanto, miswanto (2017) Equity Market Price and Its Effect on Capital Structure and Equity Issue. Advanced Science Letters, 23. pp. 8056-8059. ISSN 1936-7317

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Abstract

Equity market timing is one of several theories of capital structure. Equity market timing refers to the practice of issuing shares at high prices and repurchase it at low prices. The purpose of this study is to examine whether the equity market timing has an effect on capital structure. The sample in this study is non-financial companies listed on the Indonesian Stock Exchange over the period of 2001 to 2011. The research model used in this study is a distributed-lag regression model. This model uses current period as dependent variable and lagged (past period) as independent variable. The first hypothesis of this study is lagged equity market price has a negative effect on capital structure. The second hypothesis is lagged equity market price has a positive effect on equity issue. The lagged variable is used to measure the lagged equity market prices and leverage is used to measure capital structure. With panel data, hypothesis test results show that lagged market-to-book ratio has a negative effect on change of leverage. Thus, when lagged equity market price increase leverage will decrease. The next result, shows that lagged market-to-book ratio has a positive effect on net equity issue. When lagged equity market price is high, leverage will decrease due to equity issuance. Therefore, based on these results, it can be concluded that the equity market timing has a short run effect on the firms’ capital structure in Indonesia

Item Type: Article
Uncontrolled Keywords: Equity Market Price, Capital Structure, Equity Issue, Short Run Effect.
Subjects: MANAJEMEN > Sumber Daya Manusia
Divisions: Dosen STIE YKPN > Artikel > Jurnal
Depositing User: Unnamed user with email webmaster@stieykpn.ac.id
Date Deposited: 31 Mar 2023 06:57
Last Modified: 06 Apr 2023 07:56
URI: http://repositorybaru.stieykpn.ac.id/id/eprint/824

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