scholarly journals EFFICIENCY EVALUATION OF ACTIVITY OF THE RUSSIAN PUBLIC COMPANIES IN THE CONDITIONS OF ACTIVE REGULATION OF OPERATING COSTS AND EXTERNAL EFFECTS (SHOCKS)

2021 ◽  
Vol 12 (2) ◽  
pp. 150-156
Author(s):  
S. I. Lutsenko
Keyword(s):  
Capital Structure ◽  
Adjustment Costs ◽  
Cash Flows ◽  
Operating Costs ◽  
Financial Policy ◽  
Public Companies ◽  
Active Regulation ◽  
Internal Financing ◽  
Precautionary Motive ◽  
The Capital Structure

The author considers influences of active regulation of operating costs and negative effects (shocks) on financial policy of the Russian public companies. The Russian firms make the choice for benefit of internal financing for the purpose of increase in the corporate benefit in the conditions of external financial restrictions (sectoral sanctions). Growth of the corporate benefit leads to increment of company assets and respectively to welfare of the shareholder. The Russian public companies will review the capital structure in the conditions of growth of adjustment costs. The active policy of the Russian companies is connected with availability of sufficient size of assets which are source of mortgage providing for regulation of capital structure. Thereby, the organization solves problem of adverse selection – financing source selection taking into account its price. The companies are forced to regulate actively the capital structure in the conditions of growth of operating costs and negative shocks. Regulation of capital structure is connected with the aspiration of the company to keep part of debt for its use as financing source. Operating costs are the indicator estimating efficiency of management decisions. The Russian companies will finance the investments, first of all, by internal financing sources. Cash flows are the resource servicing the investment capital. The firms will be attracted the loan capital in the period of deficit of cash flow. The Russian companies will work in logic of precautionary motive, creating monetary stock in the conditions of shocks. The precautionary motive is the protective buffer from negative impacts from the capital markets. Low values of cash flows allow to limit the management concerning his illegal behavior – decision making in private interests.

scholarly journals IDENTIFIKASI EKSPEKTASI INVESTOR MELALUI KEBIJAKAN STRUKTUR MODAL, PROFITABILITAS, UKURAN PERUSAHAAN DAN GCPI

2014 ◽  
Vol 5 (2) ◽  
Author(s):  
Sugeng Haryanto
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Multiple Linear Regressions ◽  
Financial Reports ◽  
Public Companies ◽  
Purposive Sampling ◽  
Company Value ◽  
Linear Regressions ◽  
The Capital Structure

<p>Penelitian ini bertujuan untuk menganalisis pengaruh kausalitas antara kebijakan struktur modal, ukuran perusahaan, profitabilitas yang diukur dengan ROA dan perapan GCG yang diukur dengan Good Corporate Perception Index (GCPI) terhadap ekspektasi investor yang diukur dengan nilai perusahaan. Teknik  sampling yang digunakan dalam penelitian ini adalah purposive sampling. Sampel dalam penelitian ini adalah perusahan yang go public dan masuk dalam Indonesia Most Trusted Companies. Periode penelitian selama tahun 2012 dan 2013, serta mempublikasikan laporan keuangan 2012-2013. Jumlah sampel sebanyak 48 perusahaan. Teknik analisis yang digunakan regresi linier berganda. Hasil penelitian menunjukkan bahwa kebijakan struktur modal dan ukuran perusahaan tidak berpengaruh, sedangkan profitabilitas dan GCPI berpengaruh terhadap ekspektasi investor. Secarasimultan variabel kebijakan struktur modal, ukuran peusahaan, profitabilitas dan GCPI berpengaruh terhadap ekspektasi investor.</p><p>The objective of the study was to analyze the causality influence among capital structure policy, firm size, profitability which was measured by ROA and the implementation of GCG which was measured by Good Corporate Perception Index  (GCPI) toward the investors’ expectations which was measured by the company value. It was a purposive sampling study. The samples of this study were go public companies listed on the Indonesia’s Most Trusted Companies. The period of the study was in 2012 and 2013, and financial reports from 2012 to 2013. The total samples were 48 companies. The data were analyzed by multiple linear regressions. The result of the study showed that the capital structure policy and firm size did not  give any influence, whereas the profitability and GCPI gave influence toward the investors’ expectations. Furthermore; capital structure policy, firm size, profitability and GCPI variables influenced simultaneously toward investors’ expectations.</p>

Capital structure dynamics of Indian corporates

2019 ◽  
Vol 17 (2) ◽  
pp. 212-225
Author(s):  
Neelam Rani ◽  
Surendra S. Yadav ◽  
Naliniprava Tripathy
Keyword(s):  
Capital Structure ◽  
Generalized Method Of Moments ◽  
Adjustment Costs ◽  
Least Square ◽  
Future Research ◽  
Adjustment Process ◽  
Macroeconomic Factors ◽  
Content Type ◽  
Adjustment Speed ◽  
The Capital Structure

Purpose The purpose of this paper is to examine the capital structure determinants and speed of adjustment (SOA) toward the target capital structure of firms. Design/methodology/approach The study has used the generalized method of moments (GMM) model and two-stage least squares (TSLS) to the panel data of 3,310 Indian firms, from January 2000 to March 2018, to determine the adjustment speed toward target capital structure. Further, the study employed a fully modified ordinary least square technique to shed light on the dynamic nature of the adjustment process. Findings The results of the GMM estimations indicate that Indian firms are adjusting their capital structure toward the target rate of 10.38 percent per year. Similarly, the findings of TSLS estimate specify a SOA of 15.49 percent per year. The low adjustment speed suggests the prevalence of higher adjustment costs of Indian firms. Research limitations/implications Future research can be undertaken by including certain macroeconomic factors such as GDP, inflation and the interest rate, which also affect the SOA since firms are pretentious by market conditions while designing capital structure for firms. Practical implications In the current financial and regulatory set-up when there are frequent perturbations in the capital market, the study will be valuable for regulators, firms and academicians. The work would enable the concerned stakeholders to manage their scare resources and capital effectively by a better way to make informed decisions. It will facilitate managers of young companies to identify and regulate the factors that are more pertinent for them to make flexible financial decisions concerning the capital structure. Originality/value The study amplifies on previous studies and provides new insights on the speed of the adjustment process of Indian firms, helping to modify and refine their capital structures toward the optimum capital structure. This will not only enhance the financial flexibility in the capital structure of Indian corporates but also be of great value to the policymakers and other stakeholders.

scholarly journals The Impact of Market Timing on European Firms’ Capital Structure: RLBOs vs. IPOs

2021 ◽  
Vol 12 (2) ◽  
pp. 219
Author(s):  
Fadoua Kouki
Keyword(s):  
Capital Structure ◽  
Initial Public Offerings ◽  
Market Timing ◽  
Debt Ratio ◽  
Public Companies ◽  
Public Offerings ◽  
Timing Effect ◽  
Reverse Leveraged Buyouts ◽  
The Impact ◽  
The Capital Structure

Our study compares the impact of market timing on the capital structure of reverse leveraged buyouts (RLBOs) and initial public offerings (IPOs). Our sample is made up of 210 RLBOs and 210 public companies listed between 1995 and 2015 and linked by size (turnover) and industry (based on the first two digits of the SIC code). Our results show that the impact of market timing measures on capital structure is different between RLBOs and public companies. In accordance with Baker and Wurgler (2002) and others, these measures have a negative and significant effect on the capital structure of the two types of companies. This significance is persistent ten years after the IPO for public companies and only three years after the IPO for RLBOs. RLBOs rebalance the market timing effect on their capital structures much more quickly and therefore move toward the target debt ratio more quickly than their counterparts. These results challenge the robustness and generality of Baker and Wurgler’s (2002) market timing theory. The capital structure of RLBOs seems to be better explained by the characteristic variables of companies suggested by the theory of trade-off.

scholarly journals Testing the capital structure of Portuguese family businesses

2021 ◽  
Vol 32 (87) ◽  
pp. 510-527
Author(s):  
Luciana J. Pestana ◽  
Luís Pereira Gomes ◽  
Cristina Lopes
Keyword(s):  
Capital Structure ◽  
Family Business ◽  
Management Strategies ◽  
Adjustment Costs ◽  
Optimal Level ◽  
Order Theory ◽  
Specific Pattern ◽  
Family Businesses ◽  
The Impact ◽  
The Capital Structure

ABSTRACT The main objective of this study is to empirically test capital structure decisions in Portuguese family-owned businesses under trade-off theory (TOT) and pecking order theory (POT) and attend to the relationships between family/business interaction and agency conflicts. Family-owned businesses are essential for the development of economies, but the financing logic they adopt is not yet adequately clarified by scientific research, especially as they are more exposed to the constraints of markets imperfections. The specific pattern of business ownership may affect the financing decision and the ability to obtain funds externally. This issue is more relevant in economies where family business initiatives and less sophisticated management strategies are expressive. The greater convergence of interests in family businesses and the consequent decrease in agency costs may lead to higher levels of recognized reputation and thus easier access to indebtedness. The empirical study uses static models and dynamic panel models in order to analyze data from 4,952 Portuguese family-owned firms over the period from 2009 to 2016: the TOT following the partial debt adjustment model, and the POT following the model of the impact of the deficit of funds on debt and the model of the relationship between debt and the determinants of financing. The results of the individual tests suggest that Portuguese family-owned businesses adjust debt at the target ratio, albeit influenced by adjustment costs that keep them distant from the optimal, as well as use sources other than debt when a financial deficit occurs. Although the impact of the financial deficit is greater in total debt ratio, the velocity of adjustment to the optimal level is higher in short-term debt. Evidence from a joint test confirms that both theories explain part of the capital structure of Portuguese family-owned businesses.

The Joint Determinants of Capital Structure and Stock Rate of Return: A LISREL Model Approach

2019 ◽  
Vol 22 (02) ◽  
pp. 1950013
Author(s):  
Hong-Yi Chen ◽  
Cheng Few Lee ◽  
Tzu Tai
Keyword(s):  
Capital Structure ◽  
Stock Returns ◽  
Structural Equation ◽  
Equation Modeling ◽  
Financial Policy ◽  
Macroeconomic Factors ◽  
Managerial Entrenchment ◽  
Pricing Factors ◽  
Major Factors ◽  
The Capital Structure

We develop a simultaneous determination model of capital structure and stock returns. Specifically, we incorporate the managerial investment autonomy theory into the structural equation modeling with confirmatory factor analysis to jointly determine the capital structure and stock return. Besides attributes introduced in previous studies, we introduce indicators affecting a firm’s financing decision, such as managerial entrenchment, macroeconomic factors, government financial policy, and pricing factors. Empirical results show that stock returns, asset structure, growth, industry classification, uniqueness, volatility, financial rating, profitability, government financial policy, and managerial entrenchment are major factors of the capital structure.

scholarly journals THE INFLUENCE OF THE FINANCIAL STRUCTURE OF CAPITAL ON THE ESTIMATED VALUE OF THE COMPANY

2021 ◽  
Vol 21 (1) ◽  
Author(s):  
Elvis Mujkić
Keyword(s):  
Capital Structure ◽  
Financial Structure ◽  
Cash Flows ◽  
Business Environment ◽  
Tax Rate ◽  
Modern Business ◽  
The Subject ◽  
The Relationship ◽  
A Company ◽  
The Capital Structure

In the modern business environment, the appearance of mergers and acquisitions, the sale of companies, as well as the disappearance of companies from the market are an everyday occurrence. In these, so called “transactions”, there is a need to determine the value of a company that is merged with another company, or that is being sold, or on the other hand that disappears from the market, i.e. goes into liquidation. The companies that are the subject of these “transactions” differ in a number of criteria. One of these criteria is the capital structure. The capital structure is conditioned by numerous factors, from profitability, creditor security, all the way to financial elasticity. Each of these factors implies a different ratio of equity and borrowed capital. The aim of the research is to determine the influence of the financial structure of capital on the estimated value of the company. The methods used to estimate the value of the company are: the method of discounting net cash flow, as a method of yield approach and the method of multiplier based on comparable transactions, as a method of market approach. The influence of the capital structure on the estimated value of the company was determined on the basis of regression and correlation analysis. The results obtained by applying the multiplier method based on comparable transactions, indicate that, with the increase of the share of borrowed capital in the capital structure, the estimated value of the company increases, which is in line with Modigliani - Miller theorem from 1964. However, as the costs of financial troubles increase with the increase in indebtedness, i.e. creditors lose trust in a given company, the question arises what is the upper limit of the company’s indebtedness that maximizes the estimated value of the company. To answer this question, the method of discounting net cash flows was applied. Applying the method of discounting net cash flows, it was determined that the relationship between the share of debt in capital and the value of the company is in line with the theory of static compromise. This means that with an increase in the share of debt in capital, the value of the company will grow to a certain level of that leverage, and after that level, the value of the company will decrease with an increase in the share of debt in capital. The level of debt participation in the capital that maximizes the value of the company differs from company to company, i.e. it is not unambiguously determined and it depends on the price of equity and borrowed capital, as well as the level of income tax rate. Taking into account the above-mentioned results, as well as the results of hypothesis testing, it can be concluded that the hypothesis was confirmed, according to which with increasing share of borrowed capital, the value of the company will grow to a certain level of leverage, and after that level with further increase of leverage the value of the company decreases.

scholarly journals Factors Influencing Capital Structure of Vietnam's Real Estate Enterprises: A Move from Static to Dynamic Models

2015 ◽  
Vol 22 (04) ◽  
pp. 76-91
Author(s):  
Minh Pham Tien ◽  
Dung Nguyen Tien
Keyword(s):  
Real Estate ◽  
Capital Structure ◽  
Dynamic Models ◽  
Adjustment Costs ◽  
Order Theory ◽  
Pecking Order Theory ◽  
Factors Affecting ◽  
The Real Estate ◽  
Real Estate Enterprises ◽  
The Capital Structure

In this study, which investigates the determinants of capital structure of Vietnam’s listed real estate companies, we conduct a comparative analysis of static and dynamic models, finding out several factors affecting the capital structure. By applying panel data for 47 listed companies in the real estate domain from 2008 to 2013, we find that static panel models and dynamic estimators provide significantly different results. To finally identify the capital structure determinants, we then employ the system-GMM estimation. The empirical results indicate that the pecking order theory dominates the static trade-off theory as for the Vietnam’s listed real estate companies, which are also found to partially adjust their capital structure toward the target capital structure at a low speed (α = 0.452), implying that these have to face quite large adjustment costs.

scholarly journals Capital structure of Brazilian public companies: normality, global financial crisis and economic recession

2018 ◽  
Vol 64 (1) ◽  
pp. 78
Author(s):  
Flavio Paulino Ramos Júnior ◽  
Isabela dos Santos ◽  
Luiz Eduardo Gaio ◽  
Nelson Oliveira Stefanelli ◽  
Ivan Carlin Passos
Keyword(s):  
Data Analysis ◽  
Panel Data ◽  
Financial Crisis ◽  
Capital Structure ◽  
Empirical Analysis ◽  
Global Financial Crisis ◽  
Economic Recession ◽  
Public Companies ◽  
Main Determinants ◽  
The Capital Structure

<p>This article aims to identify the determinants of the capital structure of Brazilian companies and compare it with financial theories. In addition, the normality periods (2007, 2009–2014) and financial crisis periods (2008 and 2015) will be considered in the analysis. The sample has 114 Brazilian public companies in the periods from 2007 to 2015. The methodology used for data analysis was multiple regression for panel data. The results showed that there are differences between the determinants of the capital structure in periods of crisis and of normality. Some of the hypotheses tested were accepted. These hypotheses relate financial theory to empirical analysis. Finally, the research contributed by demonstrating the main determinants of the capital structure in the analyzed periods, showing changes between such determinants.</p>

scholarly journals TRADE-OFF THEORY VERSUS PECKING ORDER THEORY: CAPITAL STRUCTURE DECISIONS IN A PERIPHERAL REGION OF PORTUGAL

2014 ◽  
Vol 16 (2) ◽  
pp. 445-466 ◽  
Author(s):  
Zélia Serrasqueiro ◽  
Ana Caetano
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Peripheral Region ◽  
Pecking Order ◽  
Interior Region ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Theory Versus ◽  
Internal Financing ◽  
The Capital Structure

This paper seeks to analyse whether the capital structure decisions of Small and Medium-Sized Enterprises (SMEs) are closer to the assumptions of Trade-Off Theory or to those of Pecking Order Theory. We use a sample of SMEs located in the interior region of Portugal, using the LSDVC dynamic estimator as method of estimation, the empirical evidence obtained allows us to conclude that the most profitable and oldest SMEs resort less to debt, which corroborates the forecasts of Pecking Order Theory. SMEs, with greater size, resort more to debt, corroborating the forecasts of Trade-Off Theory and Pecking Order Theory. In addition, SMEs adjust noticeably their current level of debt towards the optimal debt ratio, which corroborates what is forecast by Trade-Off Theory. Therefore, this paper enhances that Trade-Off and Pecking Order Theories are not mutually exclusive in explaining the capital structure decisions of SMEs. The results suggest that younger and smaller SMEs should be object of public financing support, when the internal financing is clearly insufficient to fund those firms’ activities.

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