Market timing and capital structure: Malaysian evidence

This paper is to examines whether the market-timing are found to be relevant in Malaysian firms financing decision. Limited studies have been conducted in the emerging or developing country such as Malaysia. Thus, this study have two objectives to be achieve in this study which are (1) to identify the determinants of the change in book leverage based the market-to-book, profitability, asset tangibility, and size, (2) to seek whether the financing decision in Malaysian firms were mostly made through net equity issues as implied by the market timing theory. In the descriptive analysis show one notable finding is when the mean of net equity issues increases at IPO+5 associated with decreasing mean of book leverage and market leverage. The determinants support most of the past studies in market timing. Thereby, this study found an indicator or sign that Malaysian firms follow the market timing behavior, yet not conclusive.