How to Identify Equity Market Timing Risk: Case Study of Ping an Insurance's Financing

This paper using Ping An Insurance's Financing case shows that market timing benefits ongoing shareholders at the expense of entering and exiting ones. Managers thus have incentives to time the market if they think it is possible and if they care more about shareholders. The difference in the equity issue amounts of hot-market and cold-market firms does not capture the full extent of market timing. But timing is an important consideration even for cold-market IPO or SEO, and hence the hot-market activity represents only an incremental aspect of market timing risk.