Asset specificity, capital intensity and capital structure: An empirical test

1994 ◽  
Vol 15 (6) ◽  
pp. 563-576 ◽  
Author(s):  
Frederick H. Deb Harris
Keyword(s):  
Capital Structure ◽  
Empirical Test ◽  
Capital Intensity ◽  
Asset Specificity

Farm capital structure choice: theory and an empirical test

2014 ◽  
Vol 74 (1) ◽  
pp. 115-132 ◽  
Author(s):  
Feng Wu ◽  
Zhengfei Guan ◽  
Robert Myers
Keyword(s):  
Theoretical Model ◽  
Capital Structure ◽  
Credit Risk ◽  
Choice Theory ◽  
Empirical Test ◽  
Theoretical Framework ◽  
Comparative Statics ◽  
Content Type ◽  
Structure Choice ◽  
Capital Structure Choice

Purpose – The purpose of this paper is to provide a unified theoretical framework that explains farm capital structure choice. Design/methodology/approach – The framework accommodates different credit access scenarios and heterogeneous risk profiles of borrowers. It recognizes that the costs of capital are endogenously determined, reflecting the degree of credit risk and accessibility to credit markets. Based on the proposed model and the comparative statics derived thereof, the paper empirically tests the impacts of different factors on capital structure choice. Findings – Based on the theoretical framework, the paper derived the impacts of different factors on capital structure choice using comparative statics. Results suggest that the potential determinants of capital structure have varying effects at different ranges of leverage. Empirical evidence supports the theoretical model. Originality/value – Despite all of previous work on various aspects of farm capital structure choice, a framework that encompasses each of the different assumptions and scenarios is still lacking. The theoretical model integrates credit risk models and accommodates endogenous cost of capital, providing a comprehensive framework for studying farm capital structure choice and its determinants. The results provide insights that could help policy makers and lenders develop effective instruments to manage, monitor, and influence the financial leverage of farms at different quantiles of debt ratio.

The double-edged effects of guanxi on partner opportunism

2019 ◽  
Vol 34 (6) ◽  
pp. 1313-1322 ◽  
Author(s):  
Lu Shen ◽  
Chuang Zhang ◽  
Wenbo Teng
Keyword(s):  
Empirical Test ◽  
Asset Specificity ◽  
Sales Manager ◽  
Future Research ◽  
Control Mechanisms ◽  
Moderating Effects ◽  
Negative Effects ◽  
Content Type ◽  
Trade Offs ◽  
Matched Data

Purpose This study aims to examine the double-edged effects of guanxi on opportunism and the moderating effects of legal enforceability and partner asset specificity. It thus differs from the current literature, which primarily focuses on the benevolent effects of guanxi. Design/methodology/approach Based on matched data collected from 268 sales manager and salesperson dyads, this study tested hypotheses using hierarchical regressions. Findings The empirical test supports the conceptual model and demonstrates two findings. First, guanxi between boundary spanners follows an inverted U-shaped relationship with inter-firm opportunism. Second, both the benefits and drawbacks of guanxi are stronger under the condition of low legal enforceability and high partner asset specificity. Research limitations/implications The study did not untangle guanxi into different dimensions and did not investigate how firms should make trade-offs between the benefits and drawbacks of guanxi. Therefore, future research could further explore this question by using a multidimensional approach. Practical implications The study alerts managers that guanxi is a double-edged sword, so they should complement it with formal control mechanisms, particularly when they are operating in legally inefficient regions or when their partner firm’s asset specificity is high. Originality/value The study offers a more balanced view of guanxi by showing both its positive and negative effects on opportunism. It also uncovers legal enforceability and partner asset specificity as two boundary conditions that influence the curvilinear effects of guanxi on opportunism.

scholarly journals An Empirical Test of Capital Structure Theories for the Vietnamese Listed Firms

2019 ◽  
Vol 12 (3) ◽  
pp. 148 ◽  
Author(s):  
Nguyen ◽  
Ho ◽  
Vo
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Empirical Test ◽  
Empirical Studies ◽  
Order Theory ◽  
Asia Pacific ◽  
Method Of Moment ◽  
Pecking Order Theory ◽  
Factors Affecting ◽  
Listed Firms

Raising capital efficiently for the operations is considered a fundamental decision for any firms. Since the 1960s, various theories on capital structure have been developed. Various empirical studies had also been conducted to examine the appropriateness of these theories in different markets. Unfortunately, evidence is mixed. In the context of Vietnam, a rising powerful economy in the Asia Pacific region, this important issue has been largely ignored. This paper is conducted to provide additional evidence on this important issue. In addition, different factors affecting the capital structure decisions from the Vietnamese listed firms are examined. The Generalized Method of Moment approach is employed on the sample of 227 listed firms in Ho Chi Minh City stock exchange over the period from 2008 to 2017. Findings from this study suggest that the Vietnamese listed firms follow the trade-off theory to determine their capital structure (i.e., to determine the optimal debt level). In contrast, no evidence has been found to confirm that the pecking order theory can explain the financing decisions of the Vietnamese listed firms, as previously expected. In addition, findings from this study also indicate that ‘Fund flow deficit’ and ‘Change in sales’ are the most two important factors that affect the amount of debt issued for the Vietnamese listed firms. Implications for academics, practitioners, and the Vietnamese government have also been emerged from the findings of this paper.

scholarly journals Financial Mismatch, Assets Specificity and Capital Structure

2019 ◽  
Vol 11 (2) ◽  
pp. 236
Author(s):  
Yanwu Li
Keyword(s):  
Capital Structure ◽  
Financial Market ◽  
Stock Exchange ◽  
Governance Structure ◽  
Debt Financing ◽  
Asset Specificity ◽  
Private Companies ◽  
Market Governance ◽  
The Impact ◽  
The Relationship

At present, the problem of financial mismatch poses great challenge to China’s financial market. Financial mismatch blurs the market governance structure of debt financing, thus distorting the relationship between asset specificity and capital structure. This paper investigates companies listed on the A-share of Shanghai and Shenzhen Stock Exchange from 2012 to 2017. It tests the existence of financial mismatch and the impact of financial mismatch on asset specificity and capital structure. Empirical results show that the impact of financial mismatch on the relationship between asset specificity and capital structure of sample companies exhibits no differences in ownership. Both state-owned listed companies and private companies face the same degree of financial mismatch issues, which leads to changes in the property-specific governance structure of assets, and asset specificity is positively related to capital structure.

scholarly journals KAJIAN EMPIRIS TERHADAP STRUKTUR MODAL PERUSAHAAN DI INDUSTRI MANUFAKTUR.

2020 ◽  
Vol 5 (2) ◽  
pp. 27-36
Author(s):  
Dwi Astutik ◽  
Hesti Ristanto ◽  
Hani Krisnawati
Keyword(s):  
Capital Structure ◽  
Manufacturing Industry ◽  
Empirical Test ◽  
Investment Decision ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Investment Decision Making ◽  
Combination Of Methods ◽  
Managerial Level

Tujuan dari penelitian ini adalah melakukan pengujiann empiris mengenai pengaruh antara profitabilitas dan likuiditas terhadap struktur modal. Objek penelitian dilakukan pada perusahaan-perusahaan yang telah go public dan termasuk dalam industri Manufaktur. Pengambilan data menggunakan penggabungan metode by firm dan by years, dan diperoleh 589 data. Hasil pengujian membuktikan bahwa secara parsial,profitabilitas dan likuiditas berpengaruh negatip dan signifikan terhadap struktur modal. Saran yang dapat direkomendasikan bagi para akademisi dapat dijadikan acuan sebagai pengembangan pengujian terhadap pecking order theory. Bagi para pihak yang ada di jajaran manajerial perusahaan, menjadi rambu-rambu dalam pengambilan keputusan dalam menyusun struktur modalnya. Bagi calon investor dan investor, hasil penelitian ini dapat dijadikan sebagai salah satu bahan pertimbangan dari aspek fundamental dalam pengambilan keputusan investasi.   The purpose of this study is to conduct an empirical test of the effect between profitability and liquidity on capital structure. The object of research is conducted on companies that have gone public and are included in the Manufacturing industry. Retrieval of data using a combination of methods by firm and by years, and obtained 589 data. The test results prove that partially, profitability and liquidity have a negative and significant effect on capital structure. Suggestions that can be recommended for academics can be used as a reference as the development of testing of pecking order theory. For the parties in the managerial level of the company, they become the guidelines in making decisions in preparing their capital structure. For potential investors and investors, the results of this study can be used as a material consideration from the fundamental aspects of investment decision making.

Nigeria Ailing Industries and the Capital Structure Theory: A Need for Concern

2013 ◽  
Vol 03 (08) ◽  
pp. 31-40
Author(s):  
Ajeigbe Kola Benson ◽  
Fasesin Oladipo Oluwafolakemi ◽  
Ajeigbe Omowumi Monisola
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Stock Exchange ◽  
Capital Intensity ◽  
Structure Theory ◽  
Debt Ratio ◽  
Manufacturing Companies ◽  
Explanatory Variables ◽  
Tax Shield ◽  
Total Debt

It is necessary to identify that what are factors contribute to the firms’ capital structure composition in its operation. Hence the present study was undertaken with the objective of finding out the relationship between capital structure determinants and ailing manufacturing firms of the listed companies in Nigeria. Using a multiple regression analysis, ailing manufacturing companies in Nigeria stock exchange market was examined for the period of 2005-2010. The final sample consists of 14 manufacturing companies. In this study, dependent variable that is, leverage level of the companies, is measured by long-term debt ratio, short term debt ratio and total debt ratio. Capital structure determinants (independent variables) are measured by capital intensity, tangibility, profitability, firm size and non- debt tax shield. Findings showed that the direction of the explanatory variables such as tangibility, profitability, firm size and non-debt tax shields with total debt largely consistent with the explanations of trade-off theory and prove past empirical findings also.

Co-determination of Capital Structure and Profitability: An Empirical Test of Indonesia Stock Exchange

2020 ◽  
Vol 19 (3) ◽  
pp. 561-575
Author(s):  
Teddy Chandra ◽  
Stefani Chandra ◽  
Evelyn Wijaya ◽  
Jenifer Chandra ◽  
Martha Ng
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Empirical Test

Asset Specificity and Corporate Governance: An Empirical Test

1996 ◽  
Vol 22 (2) ◽  
pp. 16-28 ◽  
Author(s):  
Woodrow W. Cushing ◽  
Daniel E. McCarty
Keyword(s):  
Corporate Governance ◽  
Empirical Test ◽  
Asset Specificity

DETERMINANT OF CAPITAL STRUCTURE ON MULTINATIONALITY COMPANY IN INDONESIA

2018 ◽  
Vol 15 (2) ◽  
pp. 1
Author(s):  
Elok Faiqoh Himmah ◽  
Sedianingsih Sedianingsih
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Control Variable ◽  
Capital Intensity ◽  
Multiple Linear Regression Analysis ◽  
Managerial Ownership ◽  
Effective Tax Rate ◽  
Tax Rate

This study aims to examine the factors that affect the capital structure. This research use independent variable that is multinational, managerial ownership, tax uncertainty, while the control variable is effective tax rate, profit growth, return on asset, firm size, current ratio, capital intensity, and inventory intensity. The population of this study consists of all non-financial companies listed on the Indonesia Stock Exchange from 2012-2016. The sample of this research is multinational company which means having subsidiaries outside Indonesia. Statistical method used in this research is multiple linear regression analysis. The results of this study indicate that multinationality, managerial ownership, and uncertainty tax have no significant effect on capital structure. while for control variable, return on asset and firm size that have significant influence to capital structure.  

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