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Conglomerate Structure and Capital Market Timing

Identifieur interne : 002502 ( Istex/Curation ); précédent : 002501; suivant : 002503

Conglomerate Structure and Capital Market Timing

Auteurs : Xin Chang ; Gilles Hilary ; Chia Mei Shih [Australie] ; Lewis H. K. Tam

Source :

RBID : ISTEX:C796F8C290E33440F8067A2B279AB2E5C1C2890A

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English descriptors

Abstract

We examine the effects of keiretsu structure on capital market‐timing. Keiretsu groups offer a hybrid structure between fully integrated conglomerates and stand‐alone firms. We find that past market conditions affect the capital structure of keiretsu firms more than they affect the capital structure of unaffiliated firms. The decision to issue equity is more correlated with market conditions for keiretsu members than it is for unaffiliated firms. The stock returns of keiretsu firms following the issuance of equity decrease with the size of the issuance. These results suggest that keiretsu members time the issuance of equity more so than stand‐alone firms.

Url:
DOI: 10.1111/j.1755-053X.2010.01114.x

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ISTEX:C796F8C290E33440F8067A2B279AB2E5C1C2890A

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Xin Chang
<affiliation>
<mods:affiliation>Xin Chang is an Assistant Professor in the Division of Banking and Finance in the Nanyang Business School at Nanyang Technological University, S3‐B1A‐17, Nanyang Avenue, Singapore 639798.</mods:affiliation>
<wicri:noCountry code="subField">639798.</wicri:noCountry>
</affiliation>
Gilles Hilary
<affiliation>
<mods:affiliation>Gilles Hilary is an Associate Professor in the Department of Accounting at INSEAD, Fontainebleau, France, 77305.</mods:affiliation>
<wicri:noCountry code="subField">77305.</wicri:noCountry>
</affiliation>
Lewis H. K. Tam
<affiliation>
<mods:affiliation>Lewis H.K. Tam is an Assistant Professor in the Faculty of Business Administration at the University of Macau, Macau.</mods:affiliation>
<wicri:noCountry code="subField">Macau.</wicri:noCountry>
</affiliation>

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<title level="j" type="main">Financial Management</title>
<title level="j" type="alt">FINANCIAL MANAGEMENT</title>
<idno type="ISSN">0046-3892</idno>
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<keywords scheme="KwdEn" xml:lang="en">
<term>Average ratio</term>
<term>Average value</term>
<term>Bank loans</term>
<term>Book leverage ratio</term>
<term>Book value</term>
<term>Business corporation ownership</term>
<term>Bwfse</term>
<term>Bwfse_e</term>
<term>Bwmb</term>
<term>Bwmb_e</term>
<term>Bwtse</term>
<term>Capital market timing</term>
<term>Capital markets</term>
<term>Capital structure</term>
<term>Capital structures</term>
<term>Capitalization</term>
<term>Chang</term>
<term>Coefficient</term>
<term>Conglomerate</term>
<term>Conglomerate structure</term>
<term>Constant observations</term>
<term>Constant term</term>
<term>Control variables</term>
<term>Cumulative effect</term>
<term>Cumulative stock returns</term>
<term>Current portion</term>
<term>Debt financing</term>
<term>Debt issuance</term>
<term>Debt ratio</term>
<term>Debt ratios</term>
<term>Devi</term>
<term>Equity</term>
<term>Equity decrease</term>
<term>Equity financing</term>
<term>Equity issuance</term>
<term>Equity issuances</term>
<term>Equity issue</term>
<term>Equity issues</term>
<term>Equity market timing</term>
<term>Equity markets</term>
<term>Error terms</term>
<term>Etiming</term>
<term>External finance</term>
<term>External financing</term>
<term>External funds</term>
<term>Fama</term>
<term>Financial economics</term>
<term>Financial institutions</term>
<term>Financial management</term>
<term>Financing decisions</term>
<term>Firm size</term>
<term>First stage</term>
<term>Fiscal year</term>
<term>Fundamental value</term>
<term>Future stock returns</term>
<term>Group affiliation</term>
<term>Growth opportunities</term>
<term>Hilary</term>
<term>Hovakimian</term>
<term>Hybrid structure</term>
<term>Industrial groupings</term>
<term>Industry dummies</term>
<term>Industry indicator variables</term>
<term>Interaction effect</term>
<term>Interaction term</term>
<term>Interaction terms</term>
<term>Internal capital markets</term>
<term>Internal funds</term>
<term>Investment opportunities</term>
<term>Issuance</term>
<term>Issue equity</term>
<term>Japanese firms</term>
<term>Kayhan</term>
<term>Keiretsu</term>
<term>Keiretsu affiliation</term>
<term>Keiretsu firms</term>
<term>Keiretsu members</term>
<term>Keiretsu membership</term>
<term>Ktcov</term>
<term>Ktcov_e</term>
<term>Ktmb</term>
<term>Leverage</term>
<term>Leverage ratio</term>
<term>Liabilities</term>
<term>Main bank</term>
<term>Main bank system</term>
<term>Marginal effect</term>
<term>Market capitalization</term>
<term>Market conditions</term>
<term>Market leverage ratio</term>
<term>Market timing</term>
<term>Market timing activity</term>
<term>Market timing behavior</term>
<term>Market timing variables</term>
<term>Market value</term>
<term>Median</term>
<term>Member firms</term>
<term>Negative impact</term>
<term>Negative relationship</term>
<term>Other countries</term>
<term>Other firms</term>
<term>Other keiretsu members</term>
<term>Other words</term>
<term>Pacap</term>
<term>Past market conditions</term>
<term>Past market timing</term>
<term>Past market timing activity</term>
<term>Past stock returns</term>
<term>Pecking order theory</term>
<term>Period stock return</term>
<term>Portfolio</term>
<term>Probit</term>
<term>Probit model</term>
<term>Profitability</term>
<term>Quantitative analysis</term>
<term>Robustness check</term>
<term>Same period</term>
<term>Same time</term>
<term>Share issuance</term>
<term>Share issuance effect</term>
<term>Standard deviation</term>
<term>Standard errors</term>
<term>Statistical significance</term>
<term>Stock market conditions</term>
<term>Stock returns</term>
<term>Summary statistics</term>
<term>Tang</term>
<term>Tangibility</term>
<term>Target leverage ratio</term>
<term>Timing</term>
<term>Timing activity</term>
<term>Titman</term>
<term>Total assets</term>
<term>Total liabilities</term>
<term>Total liability</term>
<term>Traditional fama</term>
<term>Unaffiliated firms</term>
<term>Untabulated</term>
<term>Untabulated regressions</term>
<term>Untabulated results</term>
<term>Viswanathan</term>
<term>Wurgler</term>
</keywords>
<keywords scheme="Teeft" xml:lang="en">
<term>Average ratio</term>
<term>Average value</term>
<term>Bank loans</term>
<term>Book leverage ratio</term>
<term>Book value</term>
<term>Business corporation ownership</term>
<term>Bwfse</term>
<term>Bwfse_e</term>
<term>Bwmb</term>
<term>Bwmb_e</term>
<term>Bwtse</term>
<term>Capital market timing</term>
<term>Capital markets</term>
<term>Capital structure</term>
<term>Capital structures</term>
<term>Capitalization</term>
<term>Chang</term>
<term>Coefficient</term>
<term>Conglomerate</term>
<term>Conglomerate structure</term>
<term>Constant observations</term>
<term>Constant term</term>
<term>Control variables</term>
<term>Cumulative effect</term>
<term>Cumulative stock returns</term>
<term>Current portion</term>
<term>Debt financing</term>
<term>Debt issuance</term>
<term>Debt ratio</term>
<term>Debt ratios</term>
<term>Devi</term>
<term>Equity</term>
<term>Equity decrease</term>
<term>Equity financing</term>
<term>Equity issuance</term>
<term>Equity issuances</term>
<term>Equity issue</term>
<term>Equity issues</term>
<term>Equity market timing</term>
<term>Equity markets</term>
<term>Error terms</term>
<term>Etiming</term>
<term>External finance</term>
<term>External financing</term>
<term>External funds</term>
<term>Fama</term>
<term>Financial economics</term>
<term>Financial institutions</term>
<term>Financial management</term>
<term>Financing decisions</term>
<term>Firm size</term>
<term>First stage</term>
<term>Fiscal year</term>
<term>Fundamental value</term>
<term>Future stock returns</term>
<term>Group affiliation</term>
<term>Growth opportunities</term>
<term>Hilary</term>
<term>Hovakimian</term>
<term>Hybrid structure</term>
<term>Industrial groupings</term>
<term>Industry dummies</term>
<term>Industry indicator variables</term>
<term>Interaction effect</term>
<term>Interaction term</term>
<term>Interaction terms</term>
<term>Internal capital markets</term>
<term>Internal funds</term>
<term>Investment opportunities</term>
<term>Issuance</term>
<term>Issue equity</term>
<term>Japanese firms</term>
<term>Kayhan</term>
<term>Keiretsu</term>
<term>Keiretsu affiliation</term>
<term>Keiretsu firms</term>
<term>Keiretsu members</term>
<term>Keiretsu membership</term>
<term>Ktcov</term>
<term>Ktcov_e</term>
<term>Ktmb</term>
<term>Leverage</term>
<term>Leverage ratio</term>
<term>Liabilities</term>
<term>Main bank</term>
<term>Main bank system</term>
<term>Marginal effect</term>
<term>Market capitalization</term>
<term>Market conditions</term>
<term>Market leverage ratio</term>
<term>Market timing</term>
<term>Market timing activity</term>
<term>Market timing behavior</term>
<term>Market timing variables</term>
<term>Market value</term>
<term>Median</term>
<term>Member firms</term>
<term>Negative impact</term>
<term>Negative relationship</term>
<term>Other countries</term>
<term>Other firms</term>
<term>Other keiretsu members</term>
<term>Other words</term>
<term>Pacap</term>
<term>Past market conditions</term>
<term>Past market timing</term>
<term>Past market timing activity</term>
<term>Past stock returns</term>
<term>Pecking order theory</term>
<term>Period stock return</term>
<term>Portfolio</term>
<term>Probit</term>
<term>Probit model</term>
<term>Profitability</term>
<term>Quantitative analysis</term>
<term>Robustness check</term>
<term>Same period</term>
<term>Same time</term>
<term>Share issuance</term>
<term>Share issuance effect</term>
<term>Standard deviation</term>
<term>Standard errors</term>
<term>Statistical significance</term>
<term>Stock market conditions</term>
<term>Stock returns</term>
<term>Summary statistics</term>
<term>Tang</term>
<term>Tangibility</term>
<term>Target leverage ratio</term>
<term>Timing</term>
<term>Timing activity</term>
<term>Titman</term>
<term>Total assets</term>
<term>Total liabilities</term>
<term>Total liability</term>
<term>Traditional fama</term>
<term>Unaffiliated firms</term>
<term>Untabulated</term>
<term>Untabulated regressions</term>
<term>Untabulated results</term>
<term>Viswanathan</term>
<term>Wurgler</term>
</keywords>
<keywords scheme="Wicri" type="topic" xml:lang="fr">
<term>Conglomérat</term>
<term>Gestion financière</term>
<term>Rentabilité</term>
<term>Analyse quantitative</term>
</keywords>
</textClass>
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<front>
<div type="abstract" xml:lang="en">We examine the effects of keiretsu structure on capital market‐timing. Keiretsu groups offer a hybrid structure between fully integrated conglomerates and stand‐alone firms. We find that past market conditions affect the capital structure of keiretsu firms more than they affect the capital structure of unaffiliated firms. The decision to issue equity is more correlated with market conditions for keiretsu members than it is for unaffiliated firms. The stock returns of keiretsu firms following the issuance of equity decrease with the size of the issuance. These results suggest that keiretsu members time the issuance of equity more so than stand‐alone firms.</div>
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