Valuation Based Test of Market Timing Theory

The Optimal Capital Structure has been remained most important to any kind of decision making. All decisions follows the budget. This study is consisted upon 52 firms and 572 observations and data covers the time span of 2002 to 2012. Moreover, for the testing of Market timing theory this study utilized three control variables which are not significant. It can be easily inferred whenever firms will face deficit they will get the more capital from equity and misevaluation will increase this phenomenon