| Summary: | 碩士 === 東海大學 === 財務金融學系 === 104 === Due to the global competition in business, it is difficult for enterprises to avoid funding. Therefore, the capital financing and seasoned equity offerings (SEOs) became one of the standard practices of fund raising for enterprises. However, for the enterprises having SEOs, it is essential to find a perfect timing for capital increase. According to the historical data, there are various decisions under different theories. Take market timing as an example: enterprises tend to undertake SEOs when stocks are overvalued, and enterprises are inclined to make stock repurchase while stocks are undervalued. Based on the cost of finances (COF), enterprises tend to utilize debt financing when it comes to the pecking order for corporate financing. Yet, while enterprises are facing financial constraints, they prefer equity financing as an alternative plan in methods of business financing. This study conducts a research on the impact of marketing timing on SEO decisions on the basis of both Market Timing Theory and Packing Order Theory. Under Market Timing Theory, we include also financial constraints and the business life cycle in order to understand more the impact of financial constraints and the business life cycle on SEOs.
As stated by the results of this study, the market timing influences SEO decisions for the companies listed on the Taiwan from 2002 to 2014. When their shares are overvalued and evidence that overvalued issuers earn lower postannouncement long-run returns. When the share price is high, enterprises will use this chance to SEO decisions. After the announcement, the share price will drop to its regular selling price. It means that the share price will decline after the announcement when share price is overvalued and SEOs were undertaken by enterprises. As for market timing and financial constraints, it shows that financial constraints will have a great impact on SEO timing. The post-announcement abnormal returns of the enterprise without financial constraints are always negative abnormal returns and its share price is always worse than the enterprise with financial constraints. It also explains that firms are financially constrained because can not get extra burden longer leverage, firms will be SEO when firms are overestimated that can improve the company's capital structure, and then reflected in the company's share price. We also discovered that the equity financing is apt to be influenced by market timing. When enterprises have financial constraints, they try to choose a capital increase method which is more advantageous to them. It signifies that enterprises with financial constraints have less chance to repurchase when the share price is undervalued. Moreover, this study includes the business life cycle to undertake a research on the correlation of market timing and life cycle. The result of this study shows that market timing plays a major role in life cycle. The mature enterprise without financial constraints will have negative abnormal returns in post-announcement abnormal returns, and the performance of share price is worse than the growing enterprise with financial constraints. That is, when the growth enterprise financial constraints will be SEO when firms are overestimated that conducive to investment opportunities and improve the company's capital structure, and then reflected in the company's share price. Eventually, according to the result of pecking order of corporate financing, we noticed that market timing did influence pecking order theory. In other words, the enterprise without financial constraints will make a decision about pecking order for corporate financing when their price is overvalued and under the misevaluation at the same time. They will not utilize debt financing but only SEOs as their means of financing.
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