abstract:The market timing hypothesis is a theory of how firms and corporations in the economy decide whether to finance their investment with equity or with debt instruments. It is one of many such corporate finance theories, and is often contrasted with the pecking order theory and the trade-off theory, for example.
Markettiming thatbased onbehavioralfinancetheorygive uptheEfficientMarketHypothesis and studythe capitalstructurefrom the investorpointofviewofnon-rational.