The theory of capital structure has advanced remarkably. This
development began as many firms had  options to consider various
external factors determining the composition of debt and equity. Not
only the asymmetric information or the conflict among bondholders and
shareholders initiated the Pecking Order Theory and the Static Trade-off
Theory respectively but also the overvalued or undervalued of stock
price had to be taken as a determinant factor for identifying the ideal
debt-equity mix. The author maintains these factors as they were
pioneers to this theory on Market Timing Theory (MTT) introduced by
Baker and Wurgler (2002). The essence of this theory is described when
stock prices are overvalued, firms will finance projects through debts,
otherwise the firms will be undervalued and be relied on equity
financing.  Using the methodology introduced by Baker and Wurgler
(2002), the author selected only samples of IPOs of firms during 
2008-2009 to limit the scope of this study.  The main objective of thisy
is to test  the  hypothèses of Market Timing Theory formulated by
Dahlan (2004) and by Kusumawati and Danny (2006) which have been proven
by the GLS model, and the OLS model-like as in  Baker and Wurgler
(2002), Susilawati (2008) and Saad (2010). This study concludes that the
market-to-book ratio has a negative effect on the market leverage. The
implication is that when firms achieve certain level of earnings growth,
the stock price will be overvalued, so it would be the right timing for
firms to proceed equity financing. Under the robustness test with GLS
Random Effect, the hypothèses of MTT is supported.