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Conglomerate Structure and Capital Market Timing
Author(s) -
Chang Xin,
Hilary Gilles,
Shih Chia Mei,
Tam Lewis H.K.
Publication year - 2010
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/j.1755-053x.2010.01114.x
Subject(s) - keiretsu , equity (law) , business , capital structure , stock market , monetary economics , financial system , industrial organization , finance , economics , debt , paleontology , horse , political science , law , biology
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.