This paper investigated the effect of Market Timing Theory on capital structure.We examined capital structure to past market valuations.The firms with low 3 piece horse wall art leverage tend to financed when their valuations were high, as measured by the market-to-book ratio (MTB).
The firms with high leverage tend to be those that raised funds when their valuations were low.Temporary changes in market-to-book lead to permanent changes in capital structure and temporary increases in market-to-book lead to permanent increases in cash balances.Then the results are also difficult to reconcile with the pecking order and trade-off theory.
The results are consistent with the theory that capital structure is the cumulative outcome of a series of market-timing-motivated financing decisions.We analysed data of 101 firms listed in Tehran Stock Exchange in periods 1378-1386.The result shows that Capital Structure is not bostik roll-cote consistent with Market Timing Theory.