Do Market Timing Incentives Affect The Debt-Equity Choice of Malaysian Shariah-Compliant IPOs?
Keywords:
Capital structure, market timing, Shariah compliance, Malaysia, IPO, panel dataAbstract
Introduction: Empirical and theoretical literature points out that market timing attempts could shape financing decisions and persistently affect capital structure. However, prior studies on market timing did not distinguish between Shariah-compliant and non-compliant firms although Shariah compliance considerations may affect market timing incentives.
Purpose: This paper aims to fill this gap in the literature by investigating whether market timing theory predictions are relevant in the case of Shariah-compliant firms.
Methodology: This paper aims to fill this gap in the literature by investigating whether market timing theory predictions are relevant in the case of Shariah-compliant firms. We use a sample of 40 Malaysian Shariah-compliant companies that went public during the period from 1 January 2015 to 31 December 2018.
Findings: The findings provide useful implications for investors and portfolio managers interested in investing in Shariah-compliant IPOs. They should identify market timers to avoid low subsequent returns of equity issuers.
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