Conglomerate Structure and Capital Market Timing

Financial Management, Forthcoming

53 Pages Posted: 15 Dec 2009 Last revised: 29 Aug 2013

See all articles by Xin (Simba) Chang

Xin (Simba) Chang

Nanyang Business School, Nanyang Technological University

Gilles Hilary

Georgetown University - Department of Accounting and Business Law

Carmen Shih

Nanyang Technological University (NTU) - Nanyang Business School

Lewis Tam

Faculty of Business Administration, University of Macau

Date Written: September 24, 2010

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.

Keywords: Conglomerates, Keiretsu, Capital Structure, Market Timing, Japanese Markets, Japanese Firms

JEL Classification: G31, G32, G21

Suggested Citation

Chang, Xin and Hilary, Gilles and Shih, Chia Mei and Tam, Lewis, Conglomerate Structure and Capital Market Timing (September 24, 2010). Financial Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1521508 or http://dx.doi.org/10.2139/ssrn.1521508

Xin Chang (Contact Author)

Nanyang Business School, Nanyang Technological University ( email )

S3-B1B-76 Nanyang Avenue
Singapore, 639798
Singapore

HOME PAGE: http://www.ntu.edu.sg/home/changxin

Gilles Hilary

Georgetown University - Department of Accounting and Business Law ( email )

McDonough School of Business
Washington, DC 20057
United States

Chia Mei Shih

Nanyang Technological University (NTU) - Nanyang Business School ( email )

Singapore, 639798
Singapore

Lewis Tam

Faculty of Business Administration, University of Macau ( email )

Room E22-4055, University of Macau
Avenida da Universidade
Taipa
Macau

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