마켓타이밍과 한국기업의 자본구조

This paper examines the impact of equity market timing on corporate capital structure in Korea. We find that the effect of the historical market-to-book ratio on leverage is significantly positive, which is contrary to Baker and Wurgler’s (2002) market timing hypothesis. Instead, this finding suggests that even when the cost of equity is relatively lower than that of debt, Korean firms issue debt instead of equity. The different managerial behavior of Korean firms from that of US firms is associated with the corporate governance system of Korea because Korean firms, especially the affiliates of chaebol groups, tend to depend more on debt than equity in order to avoid dilution of controlling ownership stakes of their founding families. Furthermore, no significance of market timing for capital structure might be related to the institutional setting for security issues in Korea, where right issues are common and managers have no incentives to sell their overvalued equity to current shareholders. Meanwhile, the regression results for partial adjustment model indicate that the capital structures of Korean firms tend to move towards time-varying target debt ratios that are consistent with the dynamic tradeoff theory of capital structure. On average, the typical Korean firm closes about 34% of the gap between its current and its target debt ratios each year.