来自Journal of Finance February 2007 - Vol. 62 Issue 1 page1-54

Why Do Firms Issue Equity by AMY DITTMAR and ANJAN THAKOR∗

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ABSTRACT
We develop and test a new theory of security issuance that is consistent with the
puzzling stylized fact that firms issue equity when their stock prices are high. The
theory also generates new predictions. Our theory predicts that managers use equity
to finance projects when they believe that investors’ views about project payoffs are
likely to be aligned with theirs, thus maximizing the likelihood of agreement with
investors. Otherwise, they use debt. We find strong empirical support for our theory
and document its incremental explanatory power over other security-issuance theories
such as market timing and time-varying adverse selection.

A CENTRAL QUESTION IN CORPORATE FINANCE IS: Why and when do firms issue equity?
Recent empirical papers have exposed significant gaps between the stylized
facts and theories of security issuance and capital structure, so we seem to lack
a coherent answer to this question. Our purpose is to develop a new theory
of security issuance that is consistent with these difficult-to-explain stylized
facts.
One empirical regularity is the genesis of the current debate: Firms issue
equity when their stock prices are high. This fact is inconsistent with the two
main theories of security issuance and capital structure: tradeoff and pecking
order. The tradeoff theory asserts that a firm’s security issuance decisions move
its capital structure toward an optimum that is determined by a tradeoff between
the marginal costs (bankruptcy and agency costs) and benefits (debt tax
shields and reduction of free cash flow problems) of debt. Thus, an increase in a
firm’s stock price, which effectively lowers its leverage ratio, should lead to debt
issuance. However, the evidence suggests the opposite is true. While CEOs do
consider stock prices to be a key factor in security issuance decisions (Graham
and Harvey (2001)), firms issue equity rather than debt when stock prices are
high (e.g., Asquith and Mullins (1986), Baker and Wurgler (2002), Jung, Kim,
and Stulz (1996), Marsh (1982), and Mikkelson and Partch (1986)). Moreover,
Welch (2004) finds that firms let their leverage ratios drift with their stock

prices, rather than returning to their optimal ratios by issuing equity when
prices drop and debt when prices rise.

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