The primacy of innovation in strategic financial management-understanding the impact of innovation and performance on capital structure

2016 ◽  
Author(s):  
S. Nosheen ◽  
R. Sadiq ◽  
A. Rafay
Keyword(s):  
Capital Structure ◽  
Financial Management ◽  
And Performance ◽  
The Impact

scholarly journals Capital Structure and Firm Performance: Evidence from Malaysian Public Listed Plantation Companies

2021 ◽  
Vol 5 (1) ◽  
pp. 123-142
Author(s):  
Kim Foong Jee ◽  
Jia En Joanne Ngui ◽  
Pei Pei Jessica Poh ◽  
Wai Loon Chan ◽  
Yet Siang Wong
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Significant Relationship ◽  
Firm Growth ◽  
Control Variable ◽  
Short Term ◽  
Total Debt ◽  
And Performance ◽  
The Impact

This paper examines the relationship between capital structure and performance of firms. The study is confined to plantation sector companies in Malaysia and is based on a sample of 39 firms which listed in Bursa Malaysia for the period from 2009 to 2019. This study uses two performance measures which are ROA and ROE as the dependent variable. Besides, the capital structure measures are the short-term debt, long-term debt, total debt and firm growth, which as the independent variables. Size will be the control variable in this study. Moreover, a fixed-effect panel regression analysis has been used to analyse the impact of capital structure on firm performance. The results indicate that firm performance, which is in term of ROA, have an insignificant relationship with short-term debt (STD) and long-term debt (LTD). For the total debt (TD) and growth, there is a significant relationship with ROA. However, for the performance measured by ROE, it has an insignificant relationship with short-term debt (STD), long-term debt (LTD) and total debt (TD). Furthermore, there is a significant relationship between the growth and the performance firms from plantation sector in Malaysia.

scholarly journals Capital Structure and Performance of Deposit Money Banks in Nigeria

2021 ◽  
Vol 17 (4) ◽  
pp. 130
Author(s):  
Osareme Erhomosele
Keyword(s):  
Regression Analysis ◽  
Theoretical Model ◽  
Firm Performance ◽  
Capital Structure ◽  
Agency Cost ◽  
Return On Equity ◽  
Legal Control ◽  
And Performance ◽  
The Impact ◽  
The Relationship

Investigations into the relationship between capital structure and firm performance over the years have consistently produced mixed results in the light of prevailing theories relevant to the concept of capital structure. The study examined the nature of the relationship between the capital structure of Deposit Money Banks (DMBs) in Nigeria and the trend of performance recorded in the industry. Leverage was adopted as a surrogate for capital structure, while firm performance was proxied by profit efficiency and return on equity. A regression analysis test was applied to a balanced panel data, pooled from a sample of 11 DMBs to determine the impact of capital structure on performance. The study found evidence that supports a non-monotonic relationship between capital structure and performance of DMBs, as predicted by the agency cost theoretical model. A major recommendation elicited from the findings of the study advocates for legal control on the proportion of debt DMBs can include in their capital structure if they are to operate as efficiently as expected.

THE ROLE OF FINANCIAL RISK IN MANAGING THE CAPITAL STRUCTURE AND PERFORMANCE OF RUSSIAN COMPANIES

2021 ◽  
Vol 4 (198) ◽  
pp. 56-61
Author(s):  
G.A. Nekrasova ◽  
Keyword(s):  
Capital Structure ◽  
Financial Management ◽  
Financial Risk ◽  
Negative Impact ◽  
Return On Assets ◽  
Return On Equity ◽  
Debt Burden ◽  
Financial Management System ◽  
And Performance ◽  
The Capital Structure

Issues related to the formation and optimization of the capital structure are an important component of the company's financial management system. The effectiveness of decisions depends on external and internal factors that affect the financial activities of the company, including financial risk. The article reveals the concept of financial risk and assesses its role in the analysis of the relationship between the capital structure and profitability indicators. It is established that the negative impact of the level of debt in the capital structure on the return on assets weakens as the financial risk increases, measured in terms of current liquidity coefficients and interest coverage. An increase in the debt burden leads to an increase in the return on equity when the company has enough funds to service the debt and the revenue variation is at an average level.

scholarly journals Modelling of capital structure in relation to business performance maximization

2018 ◽  
Vol 15 (2) ◽  
pp. 292-304
Author(s):  
Jarmila Horvathova ◽  
Martina Mokrisova ◽  
Lucia Dancisinova
Keyword(s):  
Capital Structure ◽  
Business Performance ◽  
Slovak Republic ◽  
Multiple Regression Model ◽  
Financial Risks ◽  
Gradual Change ◽  
Performance Modelling ◽  
And Performance ◽  
The Impact ◽  
The Capital Structure

The aim of the article was to find out the optimal capital structure of the companies in relation to their maximum performance. To reach this aim, the data of the companies operating in the field of heat industry of the Slovak Republic were used. As the first method, a correlation matrix was applied. It was found out that there is statistically significant relationship between capital structure indicators and performance of the companies. Due to the lack of data in time series, the authors were not able to apply multiple regression model to assess the impact of these indicators on performance. Therefore, a method of modelling was used to analyze the impact of the change in capital structure on performance. Modelling was based on the principle of a gradual change in the capital structure in favor of debt. By the increase in debt, it was confirmed that there was a change in the values of selected indicators. In the course of analysis, it was confirmed that the value of EVA equity increased with the rising indebtedness by which the proposition I of the modified MM theory was supported. The performance expressed by EVA entity indicator is at its minimum when the capital structure is 90:10 in favor of equity. By increasing the debt, EVA entity rises. Based on these results, it can be stated that the performance of selected companies increases when the share of debt also rises, even when taking into account the rising financial risks.

Evaluating the impact of economic factors on REITs' capital structure around the world

2014 ◽  
Vol 32 (1) ◽  
pp. 5-20 ◽  
Author(s):  
Antonios Rovolis ◽  
Andreas Feidakis
Keyword(s):  
Panel Data ◽  
Real Estate ◽  
Capital Structure ◽  
Interest Rates ◽  
Financial Management ◽  
Dynamic Panel Data ◽  
Content Type ◽  
The World ◽  
The Impact ◽  
The Capital Structure

Purpose – This paper aims to examine the determinants of the capital structure of real estate investment trusts (REITs) across the world and explore whether this structure is characterized by any common factors. Design/methodology/approach – Endogenous and exogenous factors that affect the financial management of real estate firms are identified in the analysis. “Regular” (static) panel data regression analysis, as well as dynamic panel data techniques, is applied to a panel of listed real estate firms from 2005 to 2010. Findings – Empirical results showed that factors such as tangibility, size of the company, growth opportunities, assets turnover affect positively the financial leverage of REITs; conversely, other determinants, being debit's cost, GDP, and long-term interest rates, are negatively correlated with the financial gearing of the REITs. Practical implications – This paper identifies factors that determine the capital structure of REITs around the world. Firm executives and policy makers in different countries may wish to adjust their policies (regarding capital structure) according to the empirical findings. Originality/value – This study, using a comprehensive dataset from all over the world, investigates whether there are solid and mutual factors that can characterize the capital structure of REITs.

scholarly journals The impact of family ownership and under-aspiration performance on a firm’s capital structure

2021 ◽  
Vol 18 (3) ◽  
pp. 183-193
Author(s):  
Kieu Minh Nguyen ◽  
Tu Minh Vu
Keyword(s):  
Capital Structure ◽  
Financial Management ◽  
Family Firms ◽  
Family Ownership ◽  
Public Firms ◽  
The Impact ◽  
Positive Effect ◽  
Unique Dataset ◽  
The Capital Structure

Research on the capital structure of family firms has flourished in recent years, but the impact of performance aspiration and family ownership together on capital structure remains inadequately investigated. Therefore, the purpose of this study is to explore the impact of family ownership and under-aspiration performance and their interaction on capital structure. Panel data estimations were applied with a unique dataset of 3.857 observations from 387 public firms in Vietnam from 2010 to 2020 (134 family firms and 253 non-family firms). The results reveal that family ownership and under-aspiration performance each has a positive effect on capital structure. However, under-aspiration performance negatively moderates the positive effect of family ownership on capital structure. These findings contribute to a stream of studies on the capital structure of family firms by exploring the role of under-aspiration performance, as well as provide important implications for shareholders, managers and debtors in financial management.

Determining the impact of leaseback on the financials of the company

2021 ◽  
Vol 27 (1) ◽  
pp. 189-210
Author(s):  
Nikita A. VAKUTIN ◽  
Elena A. FEDULOVA
Keyword(s):  
Financial Management ◽  
Economic Indicators ◽  
Financial Flows ◽  
Positive Effects ◽  
Financial Position ◽  
Feasibility Evaluation ◽  
Financing Mechanism ◽  
And Performance ◽  
Key Aspects ◽  
The Impact

Subject. Being a progressive investment mechanism, leaseback is a part of financial management. It is supposed to optimize the financial position of the entity. The article discusses financial and economic indicators (ratios) that help analyze how the financial position of the company changes due to the leaseback scheme. Objectives. We herein determine how leaseback influences the financial position of the entity. For this, we describe key financial and economic indicators (ratios) by evaluating the feasibility of investment in leaseback. The study is also intended to observe how financial flows change due to the leaseback mechanism. We also examine changes in financial and economic ratios of the financial position due to leaseback mechanism. Methods. We resort to general methods of research, such as comparative analysis, synthesis, induction and deduction, thus deriving reliable and reasonable results. Results. We found out that the leaseback feasibility evaluation technique is indispensable without observing changes in financial flows and financial and economic indicators (ratios) that show the financial position and performance of a business. The article indicators key aspects to evaluate the financial feasibility of investment in leaseback, describe how it changes due to the leaseback mechanism. We also produce model assessments, referring to the leaseback deal of a certain company operating in coal mining, thus revealing the positive effect of leaseback on the financial position of the company. Conclusions and Relevance. The construction and use of the leaseback feasibility study technique justifies the choice of leaseback as an investment mechanism, which has positive effects on the financial position. Having assessed financial and economic indicators (ratios), we revealed the efficiency and feasibility of leaseback for a company that needs to replenish its working capital. The findings can be used to make reasonable investment decisions, when pondering on an appropriate corporate financing mechanism.

scholarly journals Capital structure and performance of Middle East and North Africa (MENA) banks: an assessment of credit rating

2016 ◽  
Vol 11 (1) ◽  
pp. 77-91 ◽  
Author(s):  
Ahmed A. El-Masry
Keyword(s):  
Capital Structure ◽  
North Africa ◽  
Credit Rating ◽  
Bank Performance ◽  
Communication Tool ◽  
Policy Makers ◽  
Main Determinants ◽  
And Performance ◽  
The Impact ◽  
The Capital Structure

The firm’s credit rating is an important communication tool and previous research has shown that many companies consider it important in capital structure decisions. This study examines the determinants of capital structure in MENA banks. In addition, it investigates the determinants of credit rating. Further, the impact of credit rating and capital structure on banks’ performance is examined. Therefore, this study is an attempt to answer the following questions: 1) what are the main determinants of capital structure? 2) how does credit rating affect capital structure? 3) what are the main determinants of credit rating? and 4) what is the effect of capital structure and credit rating on bank performance? The sample covers 169 banks and is divided into two sub-samples: rated (79) and non-rated banks (90). The results indicate that credit rating directly affects the capital structure decisions as rated banks use more debts than non-rated banks. Banks’ performance is positively associated with credit rating and negatively with the capital structure. This study has an implication on investors in their decisions to invest in the banking industry. It also helpful for policy makers to understand how bank’s capital structure behaves so they could take it into consideration when issuing new regulations such as Basel

scholarly journals Capital Structure and Financial Performance of Pharmaceutical Companies in Indian Stock Exchange

2020 ◽  
Vol 9 (2) ◽  
pp. 24-30
Author(s):  
Tom Jacob ◽  
V. S. Ajina
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Financial Management ◽  
Stock Exchange ◽  
Pharmaceutical Companies ◽  
Return On Equity ◽  
Equity Ratio ◽  
Long Term Consequences ◽  
The Impact

Capital Structure is an integral and important part of financial management having long term consequences. This paper tries to examine the impact of capital structure on the financial performance of Pharmaceutical companies in India. Capital structure is measured by the Debt Equity Ratio and firm performance as measured by Return on Equity. Regression Analysis is used to analyze the impact of capital structure on the financial performance of the pharmaceutical companies in India. The result indicates that the financial performance has no link with capital structure, which proves the Modigliani and Miller Theory of Capital Structure. The results of this study will provide meaningful insights to the academia and the corporate for better decision making.

scholarly journals The Impact of Corporate Strategy on the Capital Structure of Pakistani Companies (Diversification and Capital Structure)

2020 ◽  
Vol 2 (1) ◽  
pp. p27
Author(s):  
Muhammad Uzair Ali ◽  
Gong Zhimin ◽  
Muhammad Rizwanullah ◽  
Xiong Wu ◽  
Itbar Khan
Keyword(s):  
Capital Structure ◽  
Financial Management ◽  
Corporate Strategy ◽  
Stock Exchange ◽  
Firm Strategy ◽  
Dominant Strategy ◽  
Financing Decisions ◽  
Corporate Strategies ◽  
The Impact ◽  
The Capital Structure

Research into the capital structure of firms has been the subject of extensive empirical investigation. This study seeks to extend the debate by examining the endogenous influence of corporate strategy on financing decisions made by firms. Diversification is one of the corporate strategies that allow a company to enter business lines that are same or different from current operations as well as operate in several economic markets. Financial choices need to be evaluated because of their close interaction with management choices. Optimal capital structure plays a key role in achieving the overriding goal of financial management. The study sought to discover the impact of corporate diversification strategies on financial choices because study main focus is diversification strategy (A type of corporate strategy). For purposes of comparison, the current study used four of the nine Rumelt categories which correspond to Wrigley's original four, which were single product strategy, dominant strategy, related firm strategy and unrelated firm strategy. Panel data model was constructed and using a sample of 120 companies listed on the Pakistan Stock Exchange and data was obtained for companies with seven years’ quarterly data annually from 2010 to 2017. Using empirical tests, we found no relationship between diversification and leverage. Our analysis suggests that Diversifications strategy impact on capital structure indicate that this focus of enquiry has considerable potential for further resolution of the capital structure puzzle.

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