Conglomerate structure and capital market timing

We examine the effects of <i>keiretsu</i> structure on capital market-timing. <i>Keiretsu</i> groups offer a hybrid structure between fully integrated conglomerates and stand-alone firms. We find that past market conditions affect the capital structure of <i>keiretsu</i> firms more than they affect the capital structure of unaffiliated firms. The decision to issue equity is more correlated with market conditions for <i>keiretsu</i> members than it is for unaffiliated firms. The stock returns of <i>keiretsu</i> firms following the issuance of equity decrease with the size of the issuance. These results suggest that <i>keiretsu</i> members time the issuance of equity more so than stand-alone firms.