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.
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