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The practice of and motivation for equity recycling: Evidence from the Asia-Pacific region

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  • Fairhurst, Douglas (DJ)
  • Nam, Yoonsoo

Abstract

Equity recycling is the practice of contemporaneously raising equity and paying out to shareholders. We document evidence of equity recycling in the Asia-Pacific region. Exploiting variation in factors across Asia-Pacific markets, we find stronger evidence of recycling when financial constraints are not binding. Specifically, equity recycling is more prevalent in markets with greater financial development and during non-crisis time periods. Also, the practice is most pronounced for firms unlikely to face internal financial constraints. We also find evidence that equity recycling in the Asia-Pacific region is consistent with shareholders' interests and not a result of market timing by managers.

Suggested Citation

  • Fairhurst, Douglas (DJ) & Nam, Yoonsoo, 2019. "The practice of and motivation for equity recycling: Evidence from the Asia-Pacific region," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:pacfin:v:57:y:2019:i:c:s0927538x19301295
    DOI: 10.1016/j.pacfin.2019.07.002
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    More about this item

    Keywords

    Equity recycling; Corporate governance; Financial constraints; Payout policy; Equity issuance;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F30 - International Economics - - International Finance - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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