Market Timing Capital Structure Of Listed Manufacturing Companies In China

The MM theory is the starting point of studying capital structure.Acoording to the MM theory, a company's choice of a capital structure does not affect its value.But MM theoryhave strictly assumption——the assumption of ratinal investors and the Efficient MarketHypothesis. Static Trade-off theory and Pecking Order theory relax some assumptions, they have not give up the assumption of Efficient Market. Market timing that based on behavioral finance theory give up the Efficient Market Hypothesis and study the capital structure from the investor point of view of non-rational. Market timing provides a new way to study capital structure.This paper study the impact of market timing on capital structure of China's listed companies in the manufacturing sector. After reviewing the existed theories about the market timing,the paper introduce the theory,including traditional capital structure theory, behavioral finance theory and the theory of market timing. Using a series of least squares regression, we study the impact of market timing on capital structure of China's listed companies in the manufacturing sector. The results of empirical studies show that market timing indeed exist and have a significant impact in IPO financing. But the impact of market timing on capital structure is short-lived, not lasting. The results of empirical studies will help us understand the impace of market timing on capital structure, for the reference.