Evidence from us companies 2 abstract this paper investigates the capital structure determinants profitability, firm size, intangible assets, risk, growth, tax rate of a sample of 45 us firms over three years 20092011. The purpose of this study is to find the relationship of capital structure decision with the performance of the firms in the developing market economies like pakistan. Although drug supply is a key factor, we posit that the crisis is fundamentally fueled by economic and social upheaval, its etiology closely linked to the role of opioids as. A study on the listed manufacturing companies in bangladesh. Capital structure is determined by several factors, and consists of a particular combination of debt and equity which are used by firm in financing its investments. May 28, 2017 the determinants of capital structure. A study on cement sector of pakistan march 8, 2017. The real estate firms tend to use more debts to finance their investment. The paper identifies the most important determinants of capital structure of 870 listed indian firms comprising both private sector companies and government companies for the period 20012010. The empirical evidence indicates weakening support for the pecking order hypothesis and increasing support for the tradeoff theory in australia. Culture, capital structure, and implications for accounting.
Capital structure in the airline industry an empirical study of determinants of capital structure. Ex post facto research design was used to address the problem of this study. The determinants of capital structure are mixed and different for shortterm and longterm indicators. If utilized regression and correlation techniques by employing spss software to test the hypotheses. The determinants of the capital structure of listed on stock. Many studies have provided empirical evidence that firmrelated characteristics such as profitability, tangibility, firm growth, firm size and etc. Ten independent variables and three dependent variables have been tested using regression analysis. Abstract this paper analyzes the determinants of the sources of funding for the firms of an economy without stock market. Dec 29, 2016 we examine culture as a determinant of capital structure. Determinants of capital structure have received much attention among the researchers.
Capital structure, textile firms, stock exchange and pakistan. Determinants of capital structure evidence from shariah compliant and noncompliant firms. Vietnamese real estate firms should focus on balance structure debt due to complicated impacts of the determinants to their capital structure. The objective of this study is to find out the determinants of capital structure of oman corporate. However, the previous studies about capital structure still focus on the relationship of firmrelated characteristics on capital structure. Second is to explore accounting policy implications. Determinants of the capital structure of portuguese firms with. The determinants of capital structure of ftse 100 firms in. A better understanding of the information asymmetry problem between firm and external investors is necessary to reduce the adverse selection costs, 2 corporate. This study caters to the impact of firm capital structure and quality on firm market value by studying listed firms. The factors influencing the capital structure or determinants of capital structure are discussed as follows financial leverage or trading on equity. Capital structure determinants of hospitality sector smes.
Abstractwe investigate the determinants of capital structure of public listed companies on bursa malaysia, singapore stock exchange and thailand stock exchange from 2004 to 20. Capital structure a reading prepared by pamela peterson drake outline 1. The implication of capital structure theories and the effect of the firm specific determinants on the capital structure in azerbaijan firms are tested over the 20072014 periods. The empirical results indicate that, there are only 2 explanatory and significant determinants of capital structure in azerbaijan firms. The determinants of capital structure of 2439 nonbanking and nonfinance listed firms in india covering a period of 10 years, 2007 2017 are examined. The study aims to identify the capital structure determinants of the listed russian firms. The theory of trade off was developed by kraus and litzenberger 1973 arguing that the companies choose their optimal.
International journal of management science and business administration, 43, pp. Suggested citation farrukh, wafa and asad, muzaffar, the determinants of capital structure. Following the seminal article from durand 1952 about costs of capital for business, capital structure theory had its debut with an article from modigliani and miller 1958 which developed a theoretical model concluding that a firms capital structure is irrelevant to its value, asserting that a firm consists of a set of assets representing a certain capacity to generate returns, at a. It can be defined as the employment of an asset or sources of funds for which the. First is to contribute to the literature on the determinants of capital structure, which is currently replete with mixed findings. Determinants of corporate capital structure in east asia.
Furthermore identifying the determinants of capital structure also can help investors and managers of firm as it will provide better understanding of the firm capital structures strategy by considering companies characteristics in order. The determinants of this study like liquidity of firms, non debt tax shields like depreciation, more collateral net fixed assets, earnings volatility, size of firms, net commercial trade position and firms profits have impact on the capital structure choice. Firms capital structure determinants and financing choice by. They possibly will need to know the factors that influence the.
Capital structure in the airline industry an empirical. Evidence from us companies 3 introduction in modern corporate finance the capital structure is a controversial issue. A study on determinants of capital structure in india. Evidence from russia journal of corporate finance research, vol.
Accordingly, financial managers will principally want to know the relationships between certain firmspecific measures and the debt ratio. Pdf this paper aims to explore the capital structure of listed vietnamese companies in an updated. This paper highlights the major gaps in the literature on determinants of capital structure and also aims to raise specific questions for future research. Previous studies suggest that there are differences in environments involving principals and agents among the countries even within similar bankcentered or marketcentered economies. Once the available and relevant financial sources for a uruguayan firm are defined, their determinants are analyzed. Since hundreds of articles have been written about capital structure and its determinants since the 1958 paper by mm, one must be aware of the fact that different measures of capital structure. Our paper also contributes to another newly emerging strand of literature that emphasizes the role of legal environment in firms ability to raise external finance across countries. Capital structure determinants university of twente student theses. Further, there is a significant difference of capital structure decision between the two sectors.
The purpose of this study is to examine the firmlevel determinants. Determinants of the capital structure of portuguese firms. Determinants of capital structure theoretical aspects corporate finance literature has focused on two broad categories of explanation for capital structure viz. With regard to insurance companies, it was observed that the firmlevel determinants of capital structure explain insurer leveraging. Financial crisis and capital structure determinants.
This study explores the determinants of capital structure of uk ftse 100 firms. The determinants of the capital structure of listed on. Does capital structure influence company profitability. Accordingly, the main purpose of this article is to identify the key determinants of the capital structure of portuguese firms with investments in angola. The theory of trade off was developed by kraus and litzenberger 1973 arguing that the companies choose their optimal capital structure by by evaluating the revenue and costs, debt. Most empirical studies that examined the determinants of capital structure have been done for specific country and there is little evidence of gcc region. Capital structure decisions have important implications on the value of the firm, as the components of the capital determine the cost of capital. Determining the factors affecting capital structure decisions of. There should be an appropriate capital structure that generates the maximum profit for the organization, as too 1. Consistent with similar studies, it was observed that banks have a target capital structure, and adjust to this target at an adjustment speed of 44%.
Effects of leverage on the shareholders return or earnings per share have already. This study is based on the financial data collected. Common factors of leverage such as pro t, size, growth, risk, asset structure. Pdf the relationship of capital structure decisions with. Aug 14, 2017 the empirical evidence indicates weakening support for the pecking order hypothesis and increasing support for the tradeoff theory in australia. Determinants of capital structure univerzita karlova. Apr 03, 2017 the purpose of this paper is to study the status of studies on capital structure determinants in the past 40 years. Using panel data methodology and considering a sample of 43 portuguese hotels, the authors study the capital structure determinants between 2004 and 20. Determinants of capital structure mba knowledge base. Accepted 19 nov 2017, accepted author version posted online. The study examines the indebtedness level in light of the two main theories the tradeoff theory and the pecking order theory. Pooled ordinary least square regression was applied to 36 engineering sector firms in pakistani market listed on the karachi stock exchange kse during the period 20032009. Financial performance determinants of organi zations.
Evidence from an economy without stock market ignacio munyo. In section 2 the potential determinants of capital structure are summarized and theoretical and empirical evidence concerning these determinants is provided. Determinants of bank capital structure the impact of basel iii may 2016 abstract this paper examines which determinants of bank capital structure are reliably decisive for 15 publicly traded european and american banks from 2006 to 2015. In the section data, estimation methodology and model, the research methodology is presented. The aim is to examine the impact of profitability roa, nondebt tax shield ndts, tangibility tang, liquidity liq, growthgr and size on the choice of debt in the capital structure of firms. Capital structure in the airline industry an empirical study. Capital structure 30 june 2017 common template transition step 3 table 2d i from january 20 to 2018 identical to post 2018 with amount subject to pre basel iii treatment all figures are in sar000 page 5 of 9.
Firms capital structure determinants and financing choice. Moreover, studies have been done on both listed and nonlisted firms. The firms capital structure, or financial leverage, constitutes this studys dependent variable. The study uses a panel data fixed effect approach to examine the determinants of capital structure over a ten year. Thus, the current study fills the gap in the literature and provided an evidence, using recent and long data, of determinants of capital structure of banking sector in gcc region 1. Pdf determinants of capital structure and testing of theories. Capital structure, profitability, growth, firm size, liquidity, the tangibility of assets, nondebt tax shield and leverage. This study was aimed at ascertaining the effect of capital structure on commercial banks performance in nigeria for the period 2012 to 2016. The purpose of this paper is to study the status of studies on capital structure determinants in the past 40 years. We investigate the determinants of capital structure of public listed companies.
Evidence from public listed companies in malaysia, singapore and thailand. We also investigate how firmspecific factors such as profitability, firm size, tangibility of assets and depreciation to total assets along with the macroeconomic factor such as inflation influence the capital. Abstractthis paper investigates the determinants of capital structure in the context of the. This paper investigates the capital structure determinants of listed firms in india. The guiding principle is to choose the capital structure that maximizes the value of the firm. Our measure for capital structure is leverage, the debt. Determinants of capital structure and firm financial performance a plssem approach. In section 1 the most prominent theoretical and empirical findings are surveyed.
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