Pengujian Empiris Market Timing Theory Of Capital Structure Di BEJ Dengan Kasus IPO Emiten (Non Keuangan) 2000-2001


Capital structure theory has developed tremendously. Corporations now consider not only the internal factors but also the external factors. Asymmetric information with the pecking order hypothesis and static trade-off theory have not been able to explain some market phenomena. Some corporations have taken into account the current stock price as the main determinant in choosing debt or equity securities. This market timing theory was inititated by Baker and Wurgler (2002). The essence of this theory is corporations will prefer debt securities when the stock price is low and equity securities when the stock price is high.

The objective of this study is to confirm the research by Kusumawati and Danny (2002) on the market timing hypothesis using GLS, which is consistent with the findings of Baker and Wurgler (2002) using OLS model. The findings of our research is that marketing theory with the market leverage as the main proxy of capital structure, have been negatively related to market book ratio.

Key Words: Capital Structure; Market Timing Theory; Market To Book Ratio, Market Leverage


Management generally does not know when the optimal capital structure especially investors in the capital market. The issue becomes complex when management must decide the determinant factor “when” optimal capital structure. So the argument is no longer as Shyam-Sunders & Myers (1999) ie, how many servings of leverage so that optimality is reached. Theory – the traditional capital structure theories such as pecking order theory (POT) and Static Trade-Off Theory (STT) has not been satisfactory financial managers in determining the best capital structure policy. Instead they compete with each other in determining the best proxy determinant factor [see Shyam-study Sunders & Myers (1999) and Frank & Goyale (2003)].

The emergence of Market Timing Theory (MTT) from Barker & Wurgler (2002) is expected to provide “answers”, but will not be as easy as imagined. Proxy MTT in general is the market to book ratio that is at the IPO cases. Many academics as quoted Huang & Ritter (2005) criticized this proxy for the general market to book ratio is a proxy of investment decisions, namely under-valued or over-valued its a stock. Barker & Wurgler (2002) claimed market timing is “the cumulative outcome of past attempts to time the equity market.” Two assumptions used are: 1. Asymmetric information occurs varies in the capital market, rational management are reluctant to make adjustment to target leverage. 2. Management believes can do the “timing” of the equity market. And claims of Barker & Wurgler (2002) was successfully diderivasikan in empirical models. ….

Jurnal Simposium Nasional Akuntasi XI (SNA 11)
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