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Conglomerate Structure and Capital Market Timing |
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| Authors: | Xin Chang Gilles Hilary Chia Mei Shih Lewis HK Tam |
| Institution: | 1. 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.;2. Gilles Hilary is an Associate Professor in the Department of Accounting at INSEAD, Fontainebleau, France, 77305.;3. Chia Mei Shih, Citigroup and the Department of Finance at the University of Melbourne, Melbourne, Australia, VIC, 3010.;4. Lewis H.K. Tam is an Assistant Professor in the Faculty of Business Administration at the University of Macau, Macau. |
| 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. |
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