Market timing and capital structure: Evidence for dutch firms

We examine market timing and its effects on capital structures for a sample of Dutch listed firms and a sub-sample of Dutch initial public offering (IPO) firms. The results yield evidence of market timing. Stock price run-ups increase the probabilities of equity and dual issues. Further, the effects of stock price run-ups on the choices between issuance of debt, equity or both are consistent with the predictions of the market timing hypothesis. However, in contrast to the existing evidence for US firms, we do not find persistent effects of market timing on capital structures of Dutch firms.