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A Comparative Analysis in Turkey on Market Timing Theory

Year 2021, Volume: 23 Issue: 1, 139 - 157, 29.03.2021
https://doi.org/10.32709/akusosbil.604617

Abstract

This study compares the results with previous results of Turkey and other countries by testing the market timing theory of capital structure for 2010-2018 period. In this study particularly following the findings of Umutlu’s (2008a, 2008b) results, the results previously found are compared with the findings of this study. In the first step of this study, classical ordinary least-squares (OLS) are applied for two-years period after initial public offerings (IPOs) separately; thereafter in the second step panel data tests are done to all firms. Contrary to expectations of market timing, the results found shows that market-to-book (M/B) ratio affect the change in leverage ratio positively. Accordingly, firms in Turkey after 2010 increase debt ratios when M/B ratios increases agreeably to the pecking-order theorem like before in 2010. Especially firms with greater tangible assets could take more debt. After IPOs, profitable and large-sized firms turn equity financing. Findings of literature indicate that market timing theory is not only invalid in emerging countries like Turkey generally but also generally invalid in developed countries like America and England. In some developed countries, M/B ratios create persistent negative effects on change in leverage according to market timing theory. However, in Turkey, it is observed that M/B ratios doesn't create negative and persistent effect on the change in leverage.

References

  • Albanez, T. (2015). Impact of the cost of capital on the financing decisions of Brazilian companies. International Journal of Managerial Finance, 11(3), 285-307. ‎https://doi.org/10.1108/IJMF-02-2014-0026‎
  • Allini, A., Rakha, S., McMillan, D. G. and Caldarelli, A. (2018). Pecking order and market timing theory in emerging markets: The case of Egyptian firms. Research in International Business and Finance, 44, 297-308. https://doi.org/10.1016/j.ribaf.2017.07.098
  • Altı, A. (2006). How persistent is the impact of market timing on capital structure? The Journal of Finance, 61(4), 681-1710. https://doi.org/10.1111/j.1540-6261.2006.00886.x
  • Alves, P. F. P. and Ferreira, M. A. (2011). Capital structure and law around the world. Journal of Multinational Financial Management, 21(3), 119-150. https://doi.org/10.1016 /j.mulfin.2011.02.001
  • Ata, A. ve Ağ, Y. (2010). Firma karakteristiğinin sermaye yapısı üzerindeki etkisinin analizi. İstanbul Üniversitesi İktisat Fakültesi Ekonometri ve İstatistik Dergisi, 11, 45-60.
  • Baker, M. and Wurgler, J. (2000). The equity share in new issues and aggregate stock returns. The Journal of Finance, 55(5), 2219-2247. https://doi.org/10.1111 /0022-1082.00285
  • Baker, M. and Wurgler, J. (2002). Market timing and capital structure. Journal of Finance, 57, 1-32. https://doi.org/10.1111/1540-6261.00414
  • Brendea, G. (2012). Testing the impact of market timing on the Romanian firms' capital structure. Procedia Economics and Finance, 3, 138-143. https://doi.org/10.1016 /S2212-5671(12)00132-3.
  • Bruinshoofd, W. A. and De Haan, L. (2012). Market timing and corporate capital structure: A transatlantic comparison. Applied Economics, 44(28), 3691-3703. https://doi.org /10.1080/00036846.2011.581211
  • Cevheroğlu-Acar, M. G. (2018). Determinants of capital structure: Empirical evidence from Turkey. Journal of Management and Sustainability, 8(1), 31-45. https://doi.org /10.5539/jms.v8n1p31
  • Chen, D., Chen, C., Chen, J and Huang, Y. (2013). Panel data analyses of the pecking order theory and the market timing theory of capital structure in Taiwan. International Review of Economics and Finance, 27, 1-13. https://doi.org/10.1016/j.iref.2012.09.011
  • Çelik, S. ve Akarım, Y. D. 2013. Does market timing drive capital structure? Empirical Evidence from an emerging market. International Journal of Economics and Financial Issues, 3(1):140-152.
  • De Bie, T. and De Haan, L. 2007. Market timing and capital structure: Evidence for Dutch firms. De Economist, 155(2),183-206. https://doi.org/10.1007/s10645-007-9054-1
  • Gönenç, H. (2003). Capital structure decisions under micro institutional settings: The case of Turkey. Journal of Emerging Market Finance, 2(1), 57-82. https://journals.sagepub.com/doi/10.1177/097265270300200103
  • Graham, J. R. and Harvey, C. R. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60(2-3), 187-243. https://doi.org/10.1016/S0304-405X(01)00044-7
  • Hang, M., Geyer-Klingeberg, J., Rathgeber, A. W., and Stöckl, S. (2018). Measurement matters- A meta-study of the determinants of corporate capital structure. The Quarterly Review of Economics and Finance, 68, 211-225. https://doi.org/10.1016/j.qref.2017.11.011
  • Henderson, B., Jegadeesh, N. and Weisbach, M. (2006). World markets for raising new capital. Journal of Financial Economics, 82(1), 63-101. https://doi.org/10.1016 /j.jfineco.2005.08.004
  • Hovakimian, A. (2006). Are observed capital structures determined by equity market timing? Journal of Financial and Quantitative Analysis, 41(1), 221-243. https://doi.org /10.1017/S0022109000002489
  • Hovakimian, A., Opler, T. and Titman, S. (2001). The Debt-Equity choice. Journal of Financial and Quantitative Analysis, 36(1), 1-24. https://doi.org/10.2307/2676195
  • Huang, I. (2014). Does market timing persistently affect capital structure? Evidence from stock market liberalization. Pacific-Basin Finance Journal, 26, 123-144. https://doi.org /10.1016/j.pacfin.2013.12.001
  • Huang, R. and Ritter, J. R. (2005). Testing the market timing theory of capital structure. Working Paper, https://www3.nd.edu/~pschultz/HuangRitter.pdf. (Erişim tarihi: 07.08.2019)
  • Jensen, M. and Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. https://doi.org/10.1016/0304-405X(76)90026-X
  • Jindra, J. 2000. Seasoned equity offerings, overvaluation, and timing, SSRN Working Paper http://ssrn.com/abstract=216010 (Erişim tarihi: 07.08.2019)
  • Kara, E. and Erdur, D. A. (2015). Determinants of capital structure: a research on sectors that contribute to exports in Turkey. Istanbul University Journal of the School of Business, 44(2), 27-38.
  • Karacaer, S., Temiz, H. and Güleç, Ö. F. (2016). Determinants of capital structure: An application on manufacturing firms in Borsa İstanbul. International Academic Journal of Accounting and Financial Management, 3(2):47-59.
  • Kaya, H. D. (2014). The market timing theory of capital structure revisited: Evidence from the SEO market. International Journal of Economic Perspectives, 8(1), 62-74.
  • Kayhan, A. and Titman, S. (2004). Firms’ histories and their capital structures’. NBER Working Paper, No. W10526. https://www.nber.org/papers/w10526 (Erişim tarihi: 07.08.2019)
  • Kim, W. and Weisbach, M. S. (2008). Motivations for public equity offers: An international perspective. Journal of Financial Economics, 87(2), 281-307. https://doi.org/10.1016 /j.jfineco.2006.09.010
  • Kraus, A. and Litzenberger, R. H. (1973). A state-reference model of optimal financial leverage. The Journal of Finance, 28(4), 911-922. https://doi.org/10.2307/2978343
  • Mahajan, A. and Tartaroğlu, S. (2008). Equity market timing and capital structure: International evidence. Journal of Banking and Finance, 32(5), 754-766. https://doi.org /10.1016/j.jbankfin.2007.05.007
  • Modigliani, F. and Miller, M. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48(3), 261-297.
  • Myers, S. and Majluf, N. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221. https://doi.org/10.1016/0304-405X(84)90023-0
  • Myers, S. C. (1974). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147- 175. https://doi.org/10.1016/0304-405X(77)90015-0
  • Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39(3), 575-592. https://doi.org/10.2307/2327916
  • Pontoh, W. and Budiarso, N. S. (2018). Firm characteristics and capital structure adjustment. Investment Management and Financial Innovations, 15(2), 129-144. http://dx.doi.org/10.21511/imfi.15(2).2018.12
  • Rajan, R. and Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. Journal of Finance, 50(5), 1421-1460. https://doi.org /10.1111/j.1540-6261.1995.tb05184.x
  • Taggart R. A. (1977). A model of corporate financing decisions, The Journal of Finance, 32(5), 1467-1484. https://doi.org/10.2307/2326804
  • Teoh, S. H., Welch, I. and Wong, T. J. (1998a), Earnings management and the underperformance of seasoned equity offerings. Journal of Financial Economics, 50(1), 63-99. https://doi.org/10.1016/S0304-405X(98)00032-4
  • Teoh, S. H., Welch, I. and Wong, T. J. (1998b), Earnings management and the long-run market performance of initial public offerings. 53(6),1935-1974. https://doi.org/10.1111 /0022-1082.00079
  • Umutlu, G. (2008a). Gelişmekte olan ülkelerde sermaye yapısı ve piyasa zamanlaması ilişkisi, (Doktora tezi). Hacettepe Üniversitesi Sosyal Bilimler Enstitüsü İşletme Anabilim Dalı, Ankara.
  • Umutlu, G. (2008b). Pecking order and timing effects on aftermarket performance of IPOs: Evidence from Turkey. International Research Journal of Finance and Economics, 18, 142-150.
  • Umutlu, G. ve Karan, M. B. (2011). Pecking order and timing effects on aftermarket performance of IPOs: An empirical study in emerging markets. International Research Journal of Applied Finance, 2(2), 180-201.
  • Welch, I., (2004). Capital structure and stock returns. The Journal of Political Economy, 112(1), 106-131. https://doi.org/10.1086/379933
  • Zavertiaeva, M. and Nechaeva, I. (2017). Impact of market timing on the capital structure of Russian companies. Journal of Economics and Business, 92, 10-28. https://doi.org /10.1016/j.jeconbus.2017.04.001.

Piyasa Zamanlaması Teorisi Üzerine Türkiye’de Karşılaştırmalı Bir Analiz

Year 2021, Volume: 23 Issue: 1, 139 - 157, 29.03.2021
https://doi.org/10.32709/akusosbil.604617

Abstract

Bu çalışma sermaye yapısı teorilerinden piyasa zamanlamasını 2010-2018 dönemi için test ederek Türkiye'deki ve diğer ülkelerdeki önceki sonuçlarla karşılaştırmaktadır. Çalışmada özellikle Umutlu'nun (2008a, 2008b) bulgularının sonuçları takip edilerek, bulunan önceki sonuçlar bu çalışmada bulunan sonuçlarla karşılaştırılmaktadır. Çalışmanın birinci adımda ilk halka arzlar (İHAlar) sonrasındaki iki-yıllık dönem için ayrı ayrı klasik en küçük kareler (EKK) uygulanmış, daha sonraki ikinci adımda tüm şirketlere panel veri testi yapılmıştır. Bulunan sonuçlar piyasa zamanlamasında beklenenin aksine, piyasa değeri/defter değeri (PD/DD) oranının kaldıraç oranındaki değişimi pozitif etkilediğini göstermektedir. Buna göre, Türkiye'de şirketler 2010 sonrasında finansal hiyerarşi teoremi ile uygun olarak PD/DD oranları arttıkça 2010 öncesinde olduğu gibi borçlanma oranını artırmaktadır. Özellikle maddi duran varlıkları fazla olan şirketler daha fazla borç alabilmektedir. Halka arz sonrasında, kârlı veya büyük olan firmalar öz sermaye finansmanına yönelmektedir. Literatürdeki bulgular piyasa zamanlaması teorisinin yalnız Türkiye gibi gelişmekte olan ülkeler için değil Amerika ve İngiltere gibi gelişmiş ülkeler için de genellikle geçerli olmadığını göstermektedir. Bazı gelişmiş ülkelerde, piyasa zamanlaması teorisi ile uygun olarak PD/DD oranları kaldıraçtaki değişim üzerinde kalıcı negatif etkiler yaratmaktadır. Ancak Türkiye'de PD/DD oranlarının kaldıraçtaki değişim üzerinde negatif ve kalıcı etki yaratmadığı gözlemlenmiştir.

References

  • Albanez, T. (2015). Impact of the cost of capital on the financing decisions of Brazilian companies. International Journal of Managerial Finance, 11(3), 285-307. ‎https://doi.org/10.1108/IJMF-02-2014-0026‎
  • Allini, A., Rakha, S., McMillan, D. G. and Caldarelli, A. (2018). Pecking order and market timing theory in emerging markets: The case of Egyptian firms. Research in International Business and Finance, 44, 297-308. https://doi.org/10.1016/j.ribaf.2017.07.098
  • Altı, A. (2006). How persistent is the impact of market timing on capital structure? The Journal of Finance, 61(4), 681-1710. https://doi.org/10.1111/j.1540-6261.2006.00886.x
  • Alves, P. F. P. and Ferreira, M. A. (2011). Capital structure and law around the world. Journal of Multinational Financial Management, 21(3), 119-150. https://doi.org/10.1016 /j.mulfin.2011.02.001
  • Ata, A. ve Ağ, Y. (2010). Firma karakteristiğinin sermaye yapısı üzerindeki etkisinin analizi. İstanbul Üniversitesi İktisat Fakültesi Ekonometri ve İstatistik Dergisi, 11, 45-60.
  • Baker, M. and Wurgler, J. (2000). The equity share in new issues and aggregate stock returns. The Journal of Finance, 55(5), 2219-2247. https://doi.org/10.1111 /0022-1082.00285
  • Baker, M. and Wurgler, J. (2002). Market timing and capital structure. Journal of Finance, 57, 1-32. https://doi.org/10.1111/1540-6261.00414
  • Brendea, G. (2012). Testing the impact of market timing on the Romanian firms' capital structure. Procedia Economics and Finance, 3, 138-143. https://doi.org/10.1016 /S2212-5671(12)00132-3.
  • Bruinshoofd, W. A. and De Haan, L. (2012). Market timing and corporate capital structure: A transatlantic comparison. Applied Economics, 44(28), 3691-3703. https://doi.org /10.1080/00036846.2011.581211
  • Cevheroğlu-Acar, M. G. (2018). Determinants of capital structure: Empirical evidence from Turkey. Journal of Management and Sustainability, 8(1), 31-45. https://doi.org /10.5539/jms.v8n1p31
  • Chen, D., Chen, C., Chen, J and Huang, Y. (2013). Panel data analyses of the pecking order theory and the market timing theory of capital structure in Taiwan. International Review of Economics and Finance, 27, 1-13. https://doi.org/10.1016/j.iref.2012.09.011
  • Çelik, S. ve Akarım, Y. D. 2013. Does market timing drive capital structure? Empirical Evidence from an emerging market. International Journal of Economics and Financial Issues, 3(1):140-152.
  • De Bie, T. and De Haan, L. 2007. Market timing and capital structure: Evidence for Dutch firms. De Economist, 155(2),183-206. https://doi.org/10.1007/s10645-007-9054-1
  • Gönenç, H. (2003). Capital structure decisions under micro institutional settings: The case of Turkey. Journal of Emerging Market Finance, 2(1), 57-82. https://journals.sagepub.com/doi/10.1177/097265270300200103
  • Graham, J. R. and Harvey, C. R. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60(2-3), 187-243. https://doi.org/10.1016/S0304-405X(01)00044-7
  • Hang, M., Geyer-Klingeberg, J., Rathgeber, A. W., and Stöckl, S. (2018). Measurement matters- A meta-study of the determinants of corporate capital structure. The Quarterly Review of Economics and Finance, 68, 211-225. https://doi.org/10.1016/j.qref.2017.11.011
  • Henderson, B., Jegadeesh, N. and Weisbach, M. (2006). World markets for raising new capital. Journal of Financial Economics, 82(1), 63-101. https://doi.org/10.1016 /j.jfineco.2005.08.004
  • Hovakimian, A. (2006). Are observed capital structures determined by equity market timing? Journal of Financial and Quantitative Analysis, 41(1), 221-243. https://doi.org /10.1017/S0022109000002489
  • Hovakimian, A., Opler, T. and Titman, S. (2001). The Debt-Equity choice. Journal of Financial and Quantitative Analysis, 36(1), 1-24. https://doi.org/10.2307/2676195
  • Huang, I. (2014). Does market timing persistently affect capital structure? Evidence from stock market liberalization. Pacific-Basin Finance Journal, 26, 123-144. https://doi.org /10.1016/j.pacfin.2013.12.001
  • Huang, R. and Ritter, J. R. (2005). Testing the market timing theory of capital structure. Working Paper, https://www3.nd.edu/~pschultz/HuangRitter.pdf. (Erişim tarihi: 07.08.2019)
  • Jensen, M. and Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. https://doi.org/10.1016/0304-405X(76)90026-X
  • Jindra, J. 2000. Seasoned equity offerings, overvaluation, and timing, SSRN Working Paper http://ssrn.com/abstract=216010 (Erişim tarihi: 07.08.2019)
  • Kara, E. and Erdur, D. A. (2015). Determinants of capital structure: a research on sectors that contribute to exports in Turkey. Istanbul University Journal of the School of Business, 44(2), 27-38.
  • Karacaer, S., Temiz, H. and Güleç, Ö. F. (2016). Determinants of capital structure: An application on manufacturing firms in Borsa İstanbul. International Academic Journal of Accounting and Financial Management, 3(2):47-59.
  • Kaya, H. D. (2014). The market timing theory of capital structure revisited: Evidence from the SEO market. International Journal of Economic Perspectives, 8(1), 62-74.
  • Kayhan, A. and Titman, S. (2004). Firms’ histories and their capital structures’. NBER Working Paper, No. W10526. https://www.nber.org/papers/w10526 (Erişim tarihi: 07.08.2019)
  • Kim, W. and Weisbach, M. S. (2008). Motivations for public equity offers: An international perspective. Journal of Financial Economics, 87(2), 281-307. https://doi.org/10.1016 /j.jfineco.2006.09.010
  • Kraus, A. and Litzenberger, R. H. (1973). A state-reference model of optimal financial leverage. The Journal of Finance, 28(4), 911-922. https://doi.org/10.2307/2978343
  • Mahajan, A. and Tartaroğlu, S. (2008). Equity market timing and capital structure: International evidence. Journal of Banking and Finance, 32(5), 754-766. https://doi.org /10.1016/j.jbankfin.2007.05.007
  • Modigliani, F. and Miller, M. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48(3), 261-297.
  • Myers, S. and Majluf, N. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221. https://doi.org/10.1016/0304-405X(84)90023-0
  • Myers, S. C. (1974). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147- 175. https://doi.org/10.1016/0304-405X(77)90015-0
  • Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39(3), 575-592. https://doi.org/10.2307/2327916
  • Pontoh, W. and Budiarso, N. S. (2018). Firm characteristics and capital structure adjustment. Investment Management and Financial Innovations, 15(2), 129-144. http://dx.doi.org/10.21511/imfi.15(2).2018.12
  • Rajan, R. and Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. Journal of Finance, 50(5), 1421-1460. https://doi.org /10.1111/j.1540-6261.1995.tb05184.x
  • Taggart R. A. (1977). A model of corporate financing decisions, The Journal of Finance, 32(5), 1467-1484. https://doi.org/10.2307/2326804
  • Teoh, S. H., Welch, I. and Wong, T. J. (1998a), Earnings management and the underperformance of seasoned equity offerings. Journal of Financial Economics, 50(1), 63-99. https://doi.org/10.1016/S0304-405X(98)00032-4
  • Teoh, S. H., Welch, I. and Wong, T. J. (1998b), Earnings management and the long-run market performance of initial public offerings. 53(6),1935-1974. https://doi.org/10.1111 /0022-1082.00079
  • Umutlu, G. (2008a). Gelişmekte olan ülkelerde sermaye yapısı ve piyasa zamanlaması ilişkisi, (Doktora tezi). Hacettepe Üniversitesi Sosyal Bilimler Enstitüsü İşletme Anabilim Dalı, Ankara.
  • Umutlu, G. (2008b). Pecking order and timing effects on aftermarket performance of IPOs: Evidence from Turkey. International Research Journal of Finance and Economics, 18, 142-150.
  • Umutlu, G. ve Karan, M. B. (2011). Pecking order and timing effects on aftermarket performance of IPOs: An empirical study in emerging markets. International Research Journal of Applied Finance, 2(2), 180-201.
  • Welch, I., (2004). Capital structure and stock returns. The Journal of Political Economy, 112(1), 106-131. https://doi.org/10.1086/379933
  • Zavertiaeva, M. and Nechaeva, I. (2017). Impact of market timing on the capital structure of Russian companies. Journal of Economics and Business, 92, 10-28. https://doi.org /10.1016/j.jeconbus.2017.04.001.
There are 44 citations in total.

Details

Primary Language Turkish
Journal Section Law
Authors

Göknur Büyükkara 0000-0002-5586-8101

Publication Date March 29, 2021
Submission Date August 9, 2019
Published in Issue Year 2021 Volume: 23 Issue: 1

Cite

APA Büyükkara, G. (2021). Piyasa Zamanlaması Teorisi Üzerine Türkiye’de Karşılaştırmalı Bir Analiz. Afyon Kocatepe Üniversitesi Sosyal Bilimler Dergisi, 23(1), 139-157. https://doi.org/10.32709/akusosbil.604617

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