scholarly journals Influence of Corporate Taxation on the Financial Leverage of Czech, Polish and Russian Companies

2019 ◽  
Vol 13 (3) ◽  
pp. 61-70
Author(s):  
Irena Jindrichovska ◽  
Vyacheslav Moskalchuk
Keyword(s):  
Capital Structure ◽  
Eastern Europe ◽  
Research Area ◽  
Subject Area ◽  
Corporate Taxation ◽  
Financial Leverage ◽  
Short Term ◽  
Coverage Ratio ◽  
The Capital Structure

This article aims to compare and contrast the available empirical evidence concerning the capital structure of Polish,Czech and Russian companies. This is an intriguing research area due to the fact that the Czech and Polish economiesbegan their transition to the market economy contemporaneously with Russia, and so along with other cultural andhistorical parallels, the data is comparable.We compare data from a selection of large companies from the selected territories and investigate whether effective taxrate is significant determinant of capital structure. The selected sample is comprised of 69 companies (50 from Russia, 9from Poland, and 10 from Czech Republic), using data over a period of fourteen years. We perform a regression analysisand interpret the results using theoretical knowledge as articulated in the academic literature. The dependent variablein all tested regressions is financial leverage, calculated as the ratio of the sum of short-term and long-term debts to thesum of short-term and long-term assets. Other variables evaluated include interest coverage ratio, the level of companytangibility, and the cost of debt. This set of input values was uploaded from the Bloomberg database.Our results indicate that taxation does have determining effect on the choice of a certain level of leverage. Moreover,the effective tax rate represents the most important factor in determining the model of capital structure utilised by largecompanies in each country studied. We establish the dependence of capital structure models on the level of corporate taxapplied in each country and identify a set of additional determinants which play a significant role.This paper’s novelty may be summarised as representing an advanced understanding of specific aspects of influence ofthe corporate taxation on the capital structure of companies in Russia and other economies of the former Eastern Bloc.This paper shines a new light on the subject area by extending the duration of the studied data beyond previous research,to fourteen years. As such, in this paper we present a comparitive dynamic which may be mapped on to other similarcomparitive studies. Our results will be of interest in professionals and academics who are involved in the fields oftaxation, debt and equity in Eastern Europe and Russia. The schema utilised here may be applied in a similar manner toexamine the development of similar economies in Eastern Europe and further afield.

scholarly journals MANUFACTURING FIRMS’ CAPITAL STRUCTURE IN BANGLADESH: COMPARISON BETWEEN LISTED MNCS AND LOCAL COMPANIES

2021 ◽  
Vol 6 (1) ◽  
pp. 1-18
Author(s):  
Syed Mohammad Khaled Rahman ◽  
Tasmina Chowdhury Tania
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Jel Classification ◽  
Financial Leverage ◽  
Short Term ◽  
Long Run ◽  
Local Companies ◽  
Domestic Companies ◽  
The Capital Structure

The capital structure of a firm has immense significance as it has implications on corporate value and financial performance. The basic aim of the research was to analyze and compare the capital structure of Dhaka Stock Exchange (DSE)-listed multi-national companies (MNCs) and local companies of Bangladesh over 24 years (1996-2019). Stratified sampling techniques were applied to the selection of firms. Six financial leverage ratios were used to analyze and compare capital structures. There were significant differences in capital structure between local companies and MNCs as the null hypothesis was rejected. It was also found that the mean equity-financing proportion of domestic companies and MNCs were 65% and 92.5% respectively. The proportion of long term debt in total capital employed was very low for both types of companies. MNCs can raise the proportion of both short and long-term debt to take the advantage of financial leverage. Domestic companies can redeem some short term loan and replace some short term debt with long term debt. This research would be useful for corporate financial managers, creditors, and investors to take appropriate financing as well as investment decisions which would affect shareholders' wealth and value of the firm in the long run to a significant extent. JEL Classification Codes: G30, G32, G39

scholarly journals The Impact of Liquidity on the Capital Structure: Evidence from Malaysia

2016 ◽  
Vol 8 (10) ◽  
pp. 130 ◽  
Author(s):  
Maziar Ghasemi ◽  
Nazrul Hisyam Ab Razak
Keyword(s):  
Capital Structure ◽  
Short Term ◽  
Current Ratio ◽  
Debt Level ◽  
Asset Liquidity ◽  
Independent Variable ◽  
The Impact ◽  
A Company ◽  
The Capital Structure

<p class="Content">For many years, liquidity of a company’s asset and its effect on the optimal debt level has been a controversial issue among scholars in finance studies. Prior studies have demonstrated that in some countries, asset liquidity increased debt level while in other countries liquid companies were less leveraged and more regularly financed by their own capital. This study investigates the effect of liquidity on the capital structure among the 300 listed companies in the Main market of Bursa Malaysia from 2005 to 2013 fiscal years. Pooled OLS is applied to investigate the impact of liquidity ratios on different Debt ratios. Liquidity of a company, which is the independent variable of this study, is measured by two common ratios which are: quick ratio and current ratio. Additionally, the Debt/Equity and Debt/Asset ratios represent the capital structures based on the short-term, long-term and total debt. The results show that all the measures of liquidity have significant impacts on all the proxies of leverage. According to the results, Quick ratio has a positive effect on leverage; although, Current ratio is negatively related to leverage. Moreover, short-term debt is more influenced by liquidity compared to long-term debt.</p>

scholarly journals Statistical Analysis of Causality between Capital Structure and Firm Profitability: Evidence from Bosnia and Herzegovina

2015 ◽  
Vol 1 (1-2) ◽  
pp. 1-11
Author(s):  
Emina Resić ◽  
Jasmina Mangafić ◽  
Tunjo Perić
Keyword(s):  
Capital Structure ◽  
Bosnia And Herzegovina ◽  
Canonical Correlation ◽  
Debt Structure ◽  
Short Term ◽  
The Relationship ◽  
Structure Choice ◽  
Capital Structure Choice ◽  
The Capital Structure

Abstract This research is designed to examine the relationship between the capital structure and profitability of non-financial firms in Bosnia and Herzegovina during the ten years period, from 2003-2012. The goal is to prove the existence of the relationship between the firm’s capital structure choice and its profitability. The analysis is extended by including the debt structure and differentiating between the types of debt such as the long-term and the short-term ones. Canonical correlation and multiple regression analysis are used. The results of the multivariate canonical correlation analysis provide support to a hypothesis that the capital structure and profitability have statistically significant relationships. Furthermore, the findings provide support that firms develop different patterns of profitability depending on the capital structure choice. We found that an increasing proportion of short-term debt and long-term debt in the overall liability of the firm reduces its profitability.

scholarly journals PENGARUH STRUKTUR MODAL TERHADAP PROFITABILITAS EMITEN INDEKS SAHAM SYARIAH INDONESIA

2019 ◽  
Vol 2 (1) ◽  
pp. 39
Author(s):  
Prasojo Prasojo
Keyword(s):  
Capital Structure ◽  
Fixed Effect ◽  
Statistical Testing ◽  
Stock Index ◽  
Short Term ◽  
Return On Assets ◽  
Return On Equity ◽  
Equity Ratio ◽  
The Capital Structure

AbstractThis study aims to examine the capital structure for the profitability of companies into the category of the Indonesian Syariah Stock Index (ISSI). This study uses a sample of 149 companies from 2011 to 2016 which are consistently included in the ISSI list. Return on Assets (ROA), Return on Equity (ROE) as the dependent variable. While Debt to Equity Ratio (DER), Short Term Debt (STD) and Long Term Debt (LTD). Statistical testing using panel data regression with the ramdom fixed effect method. The results of the study are the capital structure that is processed with DAR variable has a significant negative effect on the profitability of the company by measuring ROA and ROE, while the capital structure proxied by STD has a significant positive effect on the profitability of the company by measuring ROA and ROE AbstrakPenelitian ini bertujuan untuk mengkaji hubungan struktur modal terhadap profitabilitas perusahaan yang termasuk dalam kategori Indek Saham Syariah Indonesia (ISSI). Penelitian ini menggunakan sampel sebanyak 149 perusahaan dari tahun 2011 sampai 2016 yang secara konsisten masuk dalam daftar ISSI. Return on Assets (ROA), Return on Equity (ROE) sebagai variabel dependen. Sedangakan Debt to Equity Ratio (DER), Short Term Debt (STD) dan Long Term Debt (LTD). Pengujian statistik dengan menggunakan regresi data panel dengan metode ramdom fixed effect. Hasil dari penelitian adalah struktur modal yang di proksikan dengan variabel DAR berpengaruh negatif signifikan terhadap profitabilitas perusahaan dengan pengukuran ROA dan ROE, sedangkan struktur modal yang diproksikan dengan STD berpengaruh positif signifikan terhadap profitabilitas perusahaan dengan pengukuran ROA dan ROE  

scholarly journals The determinants of capital structure: The case of long-term debt constraint for Jordanian firms

2008 ◽  
Vol 6 (1) ◽  
pp. 22-37 ◽  
Author(s):  
Rami Zeitun ◽  
Gary Gang Tian
Keyword(s):  
Stock Market ◽  
Capital Structure ◽  
Positive Impact ◽  
Credit Policy ◽  
Growth Opportunities ◽  
Short Term ◽  
Gulf Crisis ◽  
Banking Credit ◽  
The Capital Structure

This paper contributes to the capital structure literature by investigating the determinants of capital structure of Jordanian companies with the constraint of inadequate long-term debt as their source of financing and regional risk. We firstly document that Jordanian companies mostly depend on short-term debt, as a result of the banking credit policy that promotes short-term debt. Our results suggest that the level of gearing in Jordanian firms is positively related to size, tangibility, and earning volatility, and negatively correlated to profitability, the level of growth opportunities, liquidity and stock market activities. The level of gearing measured by short-term debt is, however, negatively correlated to tangibility. The Gulf Crisis between 1990 and 1991 is also found to have a significant but positive impact on Jordanian corporate leverage. We conclude that the capital structure decision with inadequate long-term debt access is influenced more strongly by factors such as Stock‟s Market activity (SMA).

A study on the capital structure determinants of FMCG companies in India

2021 ◽  
pp. 2150008
Author(s):  
Poornima BG ◽  
Pushpender Kumar
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Short Term ◽  
Pecking Order Theory ◽  
Factors Affecting ◽  
Tax Shield ◽  
Total Debt ◽  
Debt Tax Shield ◽  
The Capital Structure

Fast Moving Consumers Goods (FMCG) sector is the fastest and the fourth largest sector of the Indian economy. This study attempts to identify the critical factors affecting the financing decisions of 15 FMCG companies using panel framework and tries to investigate whether the factors considered provide convincing explanation as per the capital structure models like peking order theory, trade-off theory and Agency theory developed over a period of time. The data are collected from CMIE Prowess database for the period 2008 to 2019. The variables considered are profitability, size, non-debt tax shield, tangibility, uniqueness, liquidity and origin. It is found that Pooled OLS is the appropriate model for explaining the factors influencing the short-term debt, long-term debt and total debt as the dependent variables. It is evident that the short-term debt of the company is influenced by profitability, non-debt tax shield and liquidity of the company; the long-term debt is influenced by profitability, tangibility and origin of the company; and the total debt is affected by profitability, size and liquidity of the company. The factors which are significant confirm to the expected behavior with respect to pecking order theory of capital structure.

scholarly journals Corporate Taxation and Capital Structure: Evidence from Russia

2017 ◽  
Vol 11 (2) ◽  
pp. 7-14
Author(s):  
Evgeny Ilyukhin
Keyword(s):  
Panel Data ◽  
Capital Structure ◽  
Corporate Taxation ◽  
Tax Rates ◽  
Financial Leverage ◽  
Effective Tax Rates ◽  
Empirical Results

The study aims to empirically analyze whether corporate taxation has an impact on firm capital structure decisions. The results, based on panel data on Russian private (non-listed), non-financial and non-state owned firms, show that taxation has a significant impact on firm financial leverage (negative in terms of long-term debt and positive in terms of equity). The smallest and largest firms of the sample respond more dramatically to effective tax rates. The results are robust according to the applied tests. Moreover, additional empirical results are obtained for the standard capital structure determinants (size, profitability, tangibility and liquidity of assets), which contribute to capital structure theories.

scholarly journals The influence of capital structure on company performance: Evidence from Egypt

2020 ◽  
Vol 18 (1) ◽  
pp. 8-21
Author(s):  
Amani Hussein
Keyword(s):  
Capital Structure ◽  
Performance Measures ◽  
Structure Theory ◽  
Company Performance ◽  
Tobin’S Q ◽  
Short Term ◽  
Tobin's Q ◽  
And Performance ◽  
The Capital Structure

The capital structure decision is crucial for any company to maximize shareholders’ wealth and deal with its competitive environment. The research aims to examine the capital structure influence on company performance in Egypt. This research uses a sample of 168 Egyptian companies during 2012-2016 and applies panel data techniques. Eight hypotheses are proposed to test the influence of both the short-term debt and the long-term debt (as proxies of capital structure) on four performance measures (ROA, ROE, EPS, and Tobin’s Q) The research results indicate that short-term debt to assets significantly negatively affects all performance measures except for Tobin’s Q. Short-term debt to assets significantly positively affects the value of Tobin’s Q. On the other hand, the results show that long-term debt to assets affects significantly negatively return on assets but positively affects the return on equity. Therefore, the research concludes that the relevance of the capital structure theory to Egyptian companies’ behaviour is influenced by both debt and performance measures utilized.

Industry classification and the capital structure of Ghanaian SMEs

2007 ◽  
Vol 24 (3) ◽  
pp. 207-219 ◽  
Author(s):  
Joshua Abor
Keyword(s):  
Capital Structure ◽  
Agricultural Sector ◽  
Manufacturing Sector ◽  
Retail Trade ◽  
Short Term ◽  
Content Type ◽  
Analytical Technique ◽  
Industry Classification ◽  
The Capital Structure

PurposeThis study seeks to examine the effect of industry classification on the capital structure of SMEs in Ghana.Design/methodology/approachThe analytical technique employed is regression framework with various capital structure measures as dependent variables, and with industry as the independent variable. Analysis of variance (ANOVA) and other non‐parametric tests were also used to examine the differences in the capital structure of the SMEs across industries.FindingsThe results of this study indicate that SMEs in the agricultural sector exhibit the highest capital structure and asset structure or collateral value, while the wholesale and retail trade industry have the lowest debt ratio and asset structure. The regression results indicate that agriculture and pharmaceutical and medical industries depend more on long‐term and short‐term debt than does the manufacturing sector. Information and communication, and wholesale and retail trade sectors are more likely to use short‐term credit than the manufacturing sector. The results also show that the construction and mining industry is less likely to depend on short‐term debt, while hotel and hospitality depend more on long‐term debt and less on short‐term finance. The results clearly indicate that industry effect is important in explaining the capital structure of SMEs and that there are variations in capital structure across the various industries.Originality/valueThe main value of this paper is the analysis of the effect of industry classification on SMEs' capital structure from the Ghanaian perspective. The study provides insights on the financing behaviour of SMEs across various industries in Ghana.

scholarly journals The determinants of capital structure of microfinance institutions in Ghana

2013 ◽  
Vol 10 (2) ◽  
pp. 270-279 ◽  
Author(s):  
Anthony Kyereboah-Coleman
Keyword(s):  
Panel Data ◽  
Capital Structure ◽  
Board Independence ◽  
Microfinance Institutions ◽  
Short Term ◽  
Empirical Results ◽  
Finance Theory ◽  
The Capital Structure

Using a panel data methodology, this study examines the determinants of capital structure of 52 microfinance institutions (MFIs) in Ghana. The empirical results show that the MFIs are highly leveraged and that their capital structure is explained partly by standard finance theory and by other unconventional variables. Specifically, the study confirms that leverage is positively related to asset tangibility, with small MFIs using short-term and large MFIs using long-term debt. Though, the findings confirm that leverage is inversely related to risk, they also suggest that some MFIs enjoy long-term debt in spite of risk, while profitability is irrelevant in explaining the capital structure decisions of MFIs. Finally, the study shows that the reputation and board independence of MFIs significantly and positively affect their capital structure decisions.

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