This paper estimates firms' speed of adjustment by measuring the difference between simulated debt levels (target) and actual leverage (observed) levels to the difference between real leverage levels and lag levels based on the unit of observation (firm level) data. We test the impact of...

We empirically test the market timing theory of capital structure of issuing behavior of UK firms and find that the debt-equity choice decision is non-linear. In line with the previous literature, we find that managers are more likely to issue equity (debt) when equities are overvalued...

This paper examines the timing behaviour of firms in the UK. We estimate intrinsic value of firms' equities and find that managers do indeed time security issue which leads them to deviate away from target leverage levels. We further find that equity mispricing influences issue decisions as well...