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Equity and debt market timing, cost of capital and value and performance : evidence from listed firms in Thailand

Chamaiporn Kumpamool


Chamaiporn Kumpamool


Yilmaz Guney


Market timing is an infant theory of capital structure used to explain concealed motivation of managers. Equity market timing refers to equity issuance when the stock market is favourable to reduce the cost of capital, while debt market timing refers to debt financing when the interest rate is particularly low to minimize the cost of capital. However, there is no consensus in the literature as to whether firms can take such advantages in real markets, especially in Thailand. Furthermore, it is far from settled as to what the determining factors of market timing are. Additionally, the success of the decrease in cost of capital remains ambiguous. This study investigates market timing theory through three empirical studies.

The first study examines the presence of equity market timing in Thailand with 285 IPO firms and 1,038 SEO issuances from 2000 to 2014. The results reveal that IPO and SEO firms tend to take advantage in the stock market when the market is in a good condition, such as a hot period, economic expansion, and bullish time. In addition, the study finds that timers obtain higher proceeds and maintain these proceeds as cash after offering. Moreover, this is the first study to explore how the corporate governance dimension is the potential determinants of equity market timing.

The second study looks at the existence of debt market timing in Thailand with 189 corporate bond’s issuances from 2001 to 2014. The results indicate that the firms tend to time the debt market when the market is hot and there is a low interest rate. Likewise, we find that timers gain more proceeds and pay lower interest rates. Moreover, this is the first study to reveal that timers retain the proceeds as cash after issuance and that the corporate governance and board structure are significant determinants of debt market timing.

The third study investigates the influence of market timing on cost of capital and firm performance. We find that market timing policy can lead to both success and failure of cost reduction and performance increment, depending on the types of issued securities, the strategy of market timing, and the method of cost of capital and firm performance estimation.

Furthermore, this study provides some suggestions for managers, shareholders, investors, regulators and other stakeholders to comprehend the cause and effect of market timing and to prepare in order to protect their benefits. Also, this study informs regulators and policy makers to improve the efficiency of stock and bond markets in Thailand.


Chamaiporn Kumpamool. (2018). Equity and debt market timing, cost of capital and value and performance : evidence from listed firms in Thailand. (Thesis). University of Hull. Retrieved from

Thesis Type Thesis
Deposit Date Jan 14, 2019
Publicly Available Date Feb 23, 2023
Keywords Business
Public URL
Additional Information Business School, The University of Hull
Award Date Oct 1, 2018


Thesis (23.2 Mb)

Copyright Statement
© 2018 Chamaiporn Kumpamool. All rights reserved. No part of this publication may be reproduced without the written permission of the copyright holder.

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