Stock Liquidity and Debt Market Timing

• Main Authors: Jain, Ke-Rong, 簡克融
• Other Authors: Yen Ju-Fang
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/08568039050893254066

碩士 === 國立臺北大學 === 統計學系 === 102 === This study investigates the debt financial policy of firms having higher stock liquidity. Lipson and Mortal (2009) show that higher stock liquidity encourages firms to raise external financing from equity market, resulting in a lower leverage. However, through the 1971-2011 US listed company’s data, we find that some firms with high stock liquidity issue more additional debt instead. Focusing on top stock liquidity firms, we examine the difference of firm characters between high leverage (study group) and low leverage (control group) after matching with industry and size. Compared to the control group, we find that firms in study group have lower profitability, less cash amount, younger age, lower market capitalization, less dividend payment. We further find that these firms have higher net debt issuance and use the proceeds of the additional debt issuance to finance the tangible assets. This finding is consistent with Almeida and Campello (2007) that financially constrained firms or firms with poor profitability tend to increase their tangibility by debt financing to improve their ability to invest in the future. Our study thus complements to the results of Almeida and Campello (2007) by showing stock liquidity is a desirable feature for these firms.