Equity Market Timing and Capital Structure: Evidence from Tunisia and France

  •  Khemaies Bougatef    
  •  Jameleddine Chichti    


This paper investigates the relevance of market timing considerations on the debt-equity choice using a panel
of tunisian and french listed firms. Consistent with the market timing theory, we find that firms tend to issue
equity when their market valuations are relatively higher than their book values and after market performance
improvement. As a consequence, these firms become underlevraged in the short-term and this impact of equity
market timing on capital structure persists beyond eight years.

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