scholarly journals Macroeconomic Dynamics of Assets, Leverage and Trust

2016 ◽  
Vol 26 (08) ◽  
pp. 1650133 ◽  
Author(s):  
Jeroen C. Rozendaal ◽  
Yannick Malevergne ◽  
Didier Sornette
Keyword(s):  
Economic Growth ◽  
Cost Of Debt ◽  
Markov Switching Model ◽  
Return On Assets ◽  
Return On Equity ◽  
Economic Agents ◽  
Curved Trajectories ◽  
Regular Economies ◽  
The Cost

A macroeconomic model based on the economic variables (i) assets, (ii) leverage (defined as debt over asset) and (iii) trust (defined as the maximum sustainable leverage) is proposed to investigate the role of credit in the dynamics of economic growth, and how credit may be associated with both economic performance and confidence. Our first notable finding is the mechanism of reward/penalty associated with patience, as quantified by the return on assets. In regular economies where the EBITA/Assets ratio is larger than the cost of debt, starting with a trust higher than leverage results in the highest long-term return on assets (which can be seen as a proxy for economic growth). Therefore, patient economies that first build trust and then increase leverage are positively rewarded. Our second main finding concerns a recommendation for the reaction of a central bank to an external shock that affects negatively the economic growth. We find that late policy intervention in the model economy results in the highest long-term return on assets. However, this comes at the cost of suffering longer from the crisis until the intervention occurs. The phenomenon that late intervention is most effective to attain a high long-term return on assets can be ascribed to the fact that postponing intervention allows trust to increase first, and it is most effective to intervene when trust is high. These results are derived from two fundamental assumptions underlying our model: (a) trust tends to increase when it is above leverage; (b) economic agents learn optimally to adjust debt for a given level of trust and amount of assets. Using a Markov Switching Model for the EBITA/Assets ratio, we have successfully calibrated our model to the empirical data of the return on equity of the EURO STOXX 50 for the time period 2000–2013. We find that dynamics of leverage and trust can be highly nonmonotonous with curved trajectories, as a result of the nonlinear coupling between the variables. This has an important implication for policy makers, suggesting that simple linear forecasting can be deceiving in some regimes and may lead to inappropriate policy decisions.

scholarly journals PENGARUH UTANG TERHADAP PROFITABILITAS PADA PERUSAHAAN FOOD & BEVERAGE YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2011-2015

2017 ◽  
Vol 5 (1) ◽  
Author(s):  
Maizah Rosita ◽  
Rilla Gantino
Keyword(s):  
Regression Analysis ◽  
Multiple Regression Analysis ◽  
Sampling Method ◽  
Secondary Data ◽  
Short Term ◽  
Return On Assets ◽  
Return On Equity ◽  
Financial Report ◽  
Test Result

The purpose of this research is to determine the effect of The Debt (Long Term Liabilities to Total Assets and Liabilities Total Assets) to the return on assets, return on equity and earning per share. The research used secondary data from annual financial report  of Food & Beverage Company from 2011-2015 listed on BEI,  used  purposive sampling method and used multiple regression analysis. Based on the test result of simultan or test F The Long Term Liabilities to Total Assets and Short Term Liabilities is significant to the Return On Assets, Return On Equity and Earning per share. Result of partial test  or T Test, Long Term Liabilities to Total Assets is not significant on Return On assets, Short Term Liabilities to Total Assets is significant on Return on Assets. Long Term Liabilities to Total Assets is not significant to Return On Equity, Short Term Liabilities to Total Assets significant to Return On Equity, Long Term Liabilities to Total Assets in not significant to Earning per share, and Short Term Liabilities to Total assets is significant to Earning per share.

The Effect of Profitability and Financial Leverage on Cost of Debt Moderated Earnings Management

2021 ◽  
Vol 26 (1) ◽  
pp. 35
Author(s):  
Herman Ruslim, Renny Muspyta
Keyword(s):  
Earnings Management ◽  
Cost Of Debt ◽  
Manufacturing Companies ◽  
Financial Leverage ◽  
Publicly Traded ◽  
Return On Equity ◽  
Publicly Traded Companies ◽  
Negative Effect ◽  
The Cost

This study aims to determine the effect of profitability and Financial Leverage on the Cost of Debt, and the role of Earnings Management as a moderating variable. In this study, profitability is measured by the ratio of return on equity, financial leverage is measured by the proxy debt ratio, earnings management as measured by discretionary accruals, and cost of debt is measured by the ratio of interest expense divided by the average total debt. The population in this study are publicly traded companies listed on the IDX, and the sample used is manufacturing companies listed on the IDX for the 2016-2019 period. Based on the purposive sampling method, the samples obtained were 69 manufacturing companies and 276 observations. The results showed that profitability has a negative effect on the cost of debt, while financial leverage has no effect on the cost of debt, earnings management cannot weaken the negative effect of profitability on the cost of debt and earnings management cannot weaken the negative effect of financial leverage on the cost of debt.

scholarly journals Influence of inflation on long-term economic growth in the context of the raw material orientation of the national economy

2020 ◽  
Vol 159 ◽  
pp. 06003
Author(s):  
Aizhan Omarova ◽  
Zhanar Oralbaeva ◽  
Assel Turlybekova ◽  
Assiya Marat
Keyword(s):  
Economic Growth ◽  
Inflation Targeting ◽  
Functional Dependence ◽  
Policy Instruments ◽  
Raw Material ◽  
Strategic Decisions ◽  
Material Orientation ◽  
High Inflation ◽  
The Cost

In modern conditions for Kazakhstan, it becomes important to choose a development model that would be the most optimal and effective. When developing a model of economic policy, special attention should be paid to the choice of a system of indicators that could adequately describe macroeconomic processes as a whole and their interconnections. At the same time, economists argue that the implementation of the model approach can become the basis for strategic decisions only in a stable economic situation and when in the period under review the change in the cost structure of GDP is not distorted by high inflation. Therefore, in modern conditions of economic development, in our opinion, it is of interest to study the relationship between economic growth and the level of current and threshold inflation. This study substantiates the role of the threshold inflation level and proposes an equation of the functional dependence of this indicator on the main economic indicators. The necessary conditions for the implementation of the inflation targeting regime are disclosed. It is concluded that in conditions of commodity dependence, new effective monetary policy instruments are required.

scholarly journals A Study of A Causality Relationship between Profitability and Firm Value: A Comparison between European Countries

2017 ◽  
Vol 4 (1) ◽  
pp. 108
Author(s):  
Ben Said Hatem
Keyword(s):  
Firm Value ◽  
European Countries ◽  
Tobin’S Q ◽  
Return On Assets ◽  
Tobin's Q ◽  
Mean Values ◽  
Return On Equity ◽  
Market Values ◽  
Causality Relationship

The aim of our paper is to test for a causality interdependence between profitability and firm value. To this end, we examined a sample of two European countries: Italy and Poland. Our samples contain 200 firms from each country studied over a period of 4 years from 2007 to 2010. As a measure of firm performance, we use two ratios; return on assets and return on equity. Regarding firm value, we used two ratios; Tobin’s Q calculated as long-term debt increased by short-term debt divided by total assets, and Market To Book ratio calculated as market capitalization divided by shareholder’s equity. The descriptive statistics show that Italian firms have higher market values. We obtained mean values of 1,123 and 2,0698 of Tobin’s Q and MTB, respectively. However, firms of Poland are more profitable than firms of Italy. Using a data panel method, we concluded that for firms of Italy, there is a causality relationship between profitability, approximated by return on assets and return on equity and firm value, measured by Tobin’s Q. For firms of Poland, a causality relationship is also found.

scholarly journals Debt Financing and Firm Performance: Evidence from an Emerging South-Asian Country

2019 ◽  
Vol 10 (1) ◽  
pp. 40
Author(s):  
Mohammad Mazibar Rahman ◽  
Umme Khadija Kakuli ◽  
Shahnaz Parvin ◽  
Ayrin Sultana
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Financial Performance ◽  
Negative Influence ◽  
Short Term ◽  
Return On Assets ◽  
Return On Equity ◽  
Firm Financial Performance ◽  
Total Debt

This paper aims to empirically investigate the impact of capital structure choice on the firm performance of the firms listed under the Dhaka Stock Exchange of Bangladesh. Multiple regression has been employed in this research to determine the relationship between the capital structure and the firm’s financial performance. Three ratios of financial performance, i.e., return on assets, return on equity, and gross margin, have been used as a sample of non-financial Bangladeshi companies, selected from 2010 to 2015. The study records numerous findings. First, the result shows a significant negative influence of long-term debt (LTD) and total debt (TTD) on firm financial performance measured by return on assets (ROA), but no significant relationship is found between short-term debt (STD) and this measure of firm’s financial performance. Moreover, the research found that there is no significant effect of short-term debt, long-term debt and total debt on the firm financial performance measured by return on equity (ROE). Finally, the result shows that a significant negative influence of short-term debt and total debt on firm performance measured by GM, but no significant relationship was found between long-term debt and financial performance. In general terms, the results of this study may suggest that capital structure has a negative influence on firms’ financial performance in Bangladesh.

scholarly journals Corporate Social Responsibility and Crowdfunding: The Experience of the Colectual Platform in Empowering Economic and Sustainable Projects

2020 ◽  
Vol 12 (13) ◽  
pp. 5251 ◽  
Author(s):  
Jesús Mauricio Flórez-Parra ◽  
Gracia Rubio Martín ◽  
Carmen Rapallo Serrano
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Risk ◽  
Sustainable Business ◽  
Return On Assets ◽  
Financial Barriers ◽  
Return On Equity ◽  
Financial Characteristics ◽  
Corporate Social ◽  
The Cost

In recent years, sustainable crowdfunding has been one of the key elements in the search for new sources of financing. This has involved eliminating financial barriers and intermediaries, bringing entrepreneurs’ projects closer to fund providers, and thus instigating changes in traditional investment and profitability parameters. Among these indicators, the sustainable business return and its relationship with Corporate Social Responsibility (CSR) could be a relevant factor to improve the cost of funding, to explain the return on assets (ROA), and, consequently, impacting on the return on equity (ROE). In this context, this paper takes as a reference 101 projects that are part of Colectual’s lending. We analyze factors such as sustainability—the application of CSR across a social responsibility index; the financial characteristics of the company—liquidity, leverage, and solvency; and the characteristics of the loans related to crowdfunding—amount, maturity, and charge rate of the loan. Our study provides empirical evidence that, besides financial characteristics, the commitment to CSR can improve collective lending and the management of resources, as well as enhance the capital wealth of companies, by improving shareholder profitability or ROE. Investors consider not only financial risk but also sustainability factors.

scholarly journals An empirical study of the performance of South African conglomerates

1989 ◽  
Vol 20 (1) ◽  
pp. 1-6
Author(s):  
J. F. Affleck-Graves ◽  
G. H. Burt ◽  
J. M. Cleasby
Keyword(s):  
Stock Market ◽  
Empirical Study ◽  
South African ◽  
Market Returns ◽  
Return On Assets ◽  
Return On Equity ◽  
Empirical Question ◽  
Advantages And Disadvantages ◽  
Stock Market Performance

Existant financial theory is unable to explain whether on aggregate conglomeration is beneficial to either individual shareholders or to the economy. Both advantages and disadvantages can be listed for the conglomeration process and it is thus an empirical question as to whether or not shareholders really do benefit from conglomeration. In this paper the long-term profitability of conglomerates is examined in an attempt to determine whether or not such shareholders earn superior returns on aggregate. This is done by contrasting the stock market performance of a sample of South African (SA) conglomerates over a six-year period with the performance of the overall market. In addition, their performance is contrasted with that of a random portfolio of non-conglomerate companies. Finally, a pseudo-conglomerate portfolio was constructed for each conglomerate in such a way that each portfolio had the same asset structure as its matched conglomerate. The performance of the conglomerates was then contrasted with that of the pseudo-conglomerate portfolio using market returns, return on assets, and return on equity. The results indicate that on aggregate, the conglomerates significantly underperform non-conglomerates. This is consistent with the view that conglomeration is in the interest of management rather than that of the shareholders.

scholarly journals PENGARUH PENGHINDARAN PAJAK, KEPEMILIKAN INSTITUSIONAL, DAN PROFITABILITAS TERHADAP BIAYA HUTANG (Studi Empiris Pada Perusahaan Manufaktur Yang Terdaftar Di BEI Periode 2011-2015)

2019 ◽  
Vol 7 (1) ◽  
pp. 58-69
Author(s):  
Elvis Nopriyanti Sherly ◽  
Desi Fitria
Keyword(s):  
Stock Exchange ◽  
Tax Avoidance ◽  
Institutional Ownership ◽  
Cost Of Debt ◽  
Effective Tax Rate ◽  
Return On Assets ◽  
Tax Rate ◽  
Negative Effect ◽  
Internal Funds ◽  
The Cost

The purpose of this study is to prove the effect of tax avoidance, institutional ownership, and profitability on cost of debt. The sample consisted of 71 manufactured firms in listed in Indonesian Stock Exchange from 2011-2015 by using a purposive sampling method. The results of the study showed that the tax avoidance had negative effect on cost of debt. The meaning is getting smaller Cash Effective Tax Rate the cost of debt incurred greater. The results of this study also showed that the institutional ownership doesn’t had effect on cost of debt. Furthermore, the result of Return on Assets (ROA) as proxy profitability had a negative effect on cost of debt. The meaning that the higher the profitability of the company then the company will have a high internal funds that can be used in making the use of debt financing is getting smaller which causes the cost of debt also becomes smaller.

scholarly journals Evolution of Public Debt in Albania during 1990-2017 and its impact on the Economic Growth

2020 ◽  
Vol 4 (1) ◽  
pp. 59
Author(s):  
Amarda Cano
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Cost Of Debt ◽  
Specific Level ◽  
The Public ◽  
Macroeconomic Indicators ◽  
Level Of Economic Development ◽  
Second Tier ◽  
The Cost ◽  
The Empirical Analysis

Public debt is one of the most important macroeconomic indicators due to its impact on the economy of each country. Literature suggests that the effect varies in each country depending on the level of economic development and situation. Public debt will have a direct impact on a country's economic growth, but there are contrasting opinions amongst economists regarding the use of public debt, particularly in situations of distress and in developing countries. Albania is a country that would be in need of a decrease of the debt/GDP ratio. This can be done through a stimulation of the economy rather than a decrease of the public debt. The empirical analysis shows that the increase on real public debt can negatively influence the GDP, yet, we do not observe a specific level above which the effects worsened. Instead, we notie that whenever the public debt was increasing, the cost of debt would sometimes decrease because the governments substitutes the debt borrowed from second tier banks with debt borrowed from the IMF.

scholarly journals ANALYSIS OF FACTORS AFFECTING COMPANY USING DERIVATIVES

2021 ◽  
Vol 3 (1) ◽  
pp. 11
Author(s):  
Sriwati Sriwati
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Logistic Regression ◽  
Regression Analysis ◽  
Firm Size ◽  
Cost Of Debt ◽  
Return On Assets ◽  
Factors Affecting ◽  
The Cost ◽  
Size Variable

<p>This study aims to determine the factors that influence companies in using derivatives. In this study, the factors studied were the cost of debt, foreign sales, risk management, and corporate governance on the company's decision to use derivatives. The analytical method used in this research is logistic regression analysis using the Statistical Product and Services Solutions software. A total of 60 samples were used in this study, which were 20 companies included in the Corporate Governance Perception Index survey from 2016 to 2018. The Corporate Governance Perception Index survey is a survey conducted by the Indonesian Institute for Corporate Governance. The results of this study indicate that the cost of debt variable has a significant effect on the decision to use derivatives by the company. The corporate governance variable also has a significant effect on the decision to use derivatives by the company. The foreign sales variable in this study does not have a significant effect on the decision to use derivatives by companies. The risk management variable does not have a significant effect on the decision to use derivatives by the company. In this study, there are also control variables, namely firm size and return on assets. In this study, the firm size variable does not have a significant effect on the decision to use derivatives by the company. Meanwhile, the return on assets variable has a significant effect on the decision to use derivatives by the company.</p>

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