Market Timing Theory With the rise of China's capital market and the market-oriented development of companies' external financing behavior, the financing behavior and capital structure of China companies are undergoing fundamental changes, and the phenomenon of listed companies' crazy "circling money" in the stock market has led to problems such as equity financing preference and capital structure alienation. Traditional capital structure theory can't reasonably explain these phenomena. Scholars agree that China's capital market is still in the primary stage of development and belongs to an emerging market. The sharp fluctuation of stock price, the administrative guidance of the government and the irrational behavior of investors have great influence on the formation of stock market price, and there has been a phenomenon that stock price systematically deviates from its basic value. Imperfect capital market and inadequate administrative supervision have seriously affected the financing decision-making activities of China companies, and company managers cannot choose financing methods and optimal capital structure according to the traditional capital structure theory. At the end of 1990s, with the in-depth development of behavioral finance research, foreign scholars began to study the financing activities of companies from the perspective of irrational behavior of market participants, and put forward a brand-new capital structure theory, namely market timing capital structure theory. The so-called market timing capital structure theory refers to a theoretical analysis framework that breaks through the rational person hypothesis and complete arbitrage hypothesis of the traditional capital structure theory, and studies how managers choose financing tools by taking advantage of the window opportunity of the stock market and taking advantage of the temporary low-cost financing advantage in the market to maximize the value of existing shareholders and form a long-term capital structure. The theory of market timing capital structure provides us with a new perspective to explain the financing decision-making behavior of companies.