Capital Structure Shifts And Recession: An Empirical Investigation

This study investigates whether the 2007-2009 recession impacted the capital structures of U.S. corporations. Investigating all non-financial firms in the S&P 500 Index, the study finds that by boosting their book equity via dividend cuts and some debt reductions, firms kept book leverage unchanged.

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Role of Credit Rating in determining Capital structure: Evidence from Non-Financial sector of Pakistan

Studies of Applied Economics ◽

10.25115/eea.v38i3.3066 ◽

2020 ◽

Vol 38 (3) ◽

Cited By ~ 1

Author(s):

Shoaib Ali ◽

Imran Yousaf ◽

Muhammad Naveed

Keyword(s):

Capital Structure ◽

Credit Rating ◽

Least Square ◽

Annual Data ◽

Leverage Ratio ◽

Financial Decisions ◽

Financial Firms ◽

High Level ◽

The Impact ◽

The Capital Structure

This paper aims to examine the impact of external credit ratings on the financial decisions of the firms in Pakistan. This study uses the annual data of 70 non-financial firms for the period 2012-2018. It uses ordinary least square (OLS) to estimate the impact of credit rating on capital structure. The results show that rated firm has a high level of leverage. Moreover, Profitability and tanagability are also found to be a significantly negative determinant of the capital structure, whereas, size of the firm has a significant positive relationship with the capital structure of the firm. Besides, there exists a non-linear relationship between the credit rating and the capital structure. The rated firms have higher leverage as compared to the non-rated firms. The high and low rated firms have a low level of leverage, while mid rated firms have a higher leverage ratio. The finding of the study have practical implications for the manager; they can have easier access to the financial market by just having a credit rating no matter high or low. Policymakers must stress upon the rating agencies to keep improving themselves as their rating severs as the measure to judge the creditworthiness of the firm by both the investors and management as well.

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Capital Structure and Profitability of Selected Listed Non-Financial Firms in Ghana

SSRN Electronic Journal ◽

10.2139/ssrn.2278250 ◽

2013 ◽

Cited By ~ 1

Author(s):

Anthony Hercules Turkson ◽

Isaac Aggrey Fyn ◽

Augustina Sackle Sarkey ◽

James Kwesi Ansah

Keyword(s):

Capital Structure ◽

Financial Firms

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Empirical Investigation of Symmetric and Asymmetric Target Adjustment Models: Capital Structure of Non-Financial Firms in Jordan

International Journal of Economics and Finance ◽

10.5539/ijef.v9n3p133 ◽

2017 ◽

Vol 9 (3) ◽

pp. 133 ◽

Cited By ~ 1

Author(s):

Bashar K. Abu Khalaf

Keyword(s):

Capital Structure ◽

Stock Exchange ◽

Interaction Model ◽

Firm Characteristics ◽

Leverage Ratio ◽

Financial Firms ◽

Large Size ◽

Amman Stock Exchange ◽

Target Leverage ◽

The Impact

The different capital structure theories propose the possible asymmetric behavior of capital structure. Thus, this paper empirically investigates whether non-financial Jordanian firms follow symmetrical or asymmetrical adjustment model. Then, an interaction model with the size and profitability (firm characteristics) investigated the impact of low/high profit and small/large size on the adjustment of leverage towards the target leverage ratio. This paper covered the period of 14 years (2002-2015) for a total of 110 companies listed on Amman Stock Exchange (75 industrial and 35 services). Results indicate that although Jordanian firms seek a target leverage ratio, their adjustment towards that target is Asymmetrical and high profitable and large companies tend to adjust faster than low profitable and small size companies.

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Mavenness And Salespeople Success: An Empirical Investigation

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v28i5.7232 ◽

2012 ◽

Vol 28 (5) ◽

pp. 903 ◽

Cited By ~ 1

Author(s):

Dale T. Eesley ◽

Phani Tej Adidam

Keyword(s):

Empirical Investigation ◽

Sales Force ◽

Insurance Company ◽

Sales Managers ◽

Font Size ◽

Salesperson Performance ◽

Control Variables ◽

Confirmatory Factor ◽

And Training ◽

Three Factor

The sales literature has examined many characteristics of highly successful salespeople but as yet has not evaluated the concept of mavenness in the context of sales. Mavens are persons who have a passionate desire to freely share their expertise and knowledge for the benefit of others. This paper develops a three-factor measure of mavenness that measures levels of expertise, passion and the desire to share knowledge, and tests if higher levels of mavenness are associated with superior salesperson performance. The scale was administered to a sample of 122 salespersons in a large insurance company. Data on salesperson performance as well as other control variables were collected from archival records. Confirmatory factor analysis provided satisfactory support for the scale. Mavenness and the control variables were regressed on salesperson performance. All three factors of mavenness were highly significant. Sales managers can improve the selection and training of their sales force by using the scale to find candidates with high levels of mavenness. Although the concept of mavenness is not new, no attempt to measure this trait has been made previously. Furthermore, this trait has not before been tested to see if high levels of mavenness are associated with superior salesperson performance.

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EFFECT OF CREDIT RATING ON CAPITAL STRUCTURE: A STUDY ON NON-FINANCIAL FIRMS IN PAKISTAN

IBT Journal of Business Studies ◽

10.46745/ilma.jbs.2012.08.02.05 ◽

2012 ◽

Vol 12 (1) ◽

Author(s):

Keyword(s):

Capital Structure ◽

Credit Rating ◽

Stock Exchange ◽

Credit Ratings ◽

Least Square ◽

Statistical Tool ◽

Ordinary Least Square ◽

Optimal Capital Structure ◽

Financial Firms ◽

The Impact

Purpose- Aim of this study was to investigate whether the credit rating is an important determinant other than the firm's characteristic to obtain optimal capital structure focusing on the research hypothesis that the firms with higher credit along with the other factors (FTOA, ROA and Size) tend to have more debt in their capital structure of firms rated by P?CR? and Karachi Stock Exchange (KSE). Methodology/Sample- For this research, sample size of 48 observations (3 years data of 16 firms) was taken on the basis of convenience sampling. Results obtained by using Ordinary Least Square Model (OLS) as statistical tool to test the hypothesis Findings- Analysis clearly suggested that credit ratings do have an impact on firm's capital structure. It was concluded that firms with higher credit ratings along with other factors (FTOA, ROA and Size) do not tend to have more debt in their capital structure. Implications- Outcomes of this research might help investors, debtors and other stakeholders of the firms (rated by PACRA) to understand the impact of credit rating on firm's debt ratio and the overall dynamics and mechanism of capital structure.

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An Empirical Investigation into the Applicability of Fama-French Three Factor Model in Explaining Portfolio Returns: Evidence from Non-Financial Firms on the Ghana Stock Exchange

International Journal of Financial Research ◽

10.5430/ijfr.v7n1p75 ◽

2015 ◽

Vol 7 (1) ◽

Author(s):

Prince Acheampong ◽

Sydney Kwesi Swanzy

Keyword(s):

Empirical Investigation ◽

Factor Model ◽

Stock Exchange ◽

Financial Firms ◽

Portfolio Returns ◽

Ghana Stock Exchange ◽

Three Factor

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Firm, industry, and country level determinants of capital structure: evidence from Pakistan

South Asian Journal of Global Business Research ◽

10.1108/sajgbr-05-2015-0036 ◽

2016 ◽

Vol 5 (3) ◽

pp. 362-384 ◽

Cited By ~ 9

Author(s):

Tanveer Ahsan ◽

Man Wang ◽

Muhammad Azeem Qureshi

Keyword(s):

Corporate Governance ◽

Capital Structure ◽

Economic Conditions ◽

Governance Mechanism ◽

Short Term ◽

Policy Makers ◽

Content Type ◽

Financial Firms ◽

Country Level ◽

Corporate Governance Mechanism

Purpose The purpose of this paper is to find out firm, industry, and country level determinants of capital structure of Pakistani listed non-financial firms. Design/methodology/approach The authors use a fixed effects panel data model over a 39 years (1972-2010) unbalanced panel data of Pakistani non-financial listed firms to determine the factors that influence capital structure of these firms. Findings The authors find that Pakistani firms prefer retained earnings to finance their business projects, and debt is easily available for experienced firms. Moreover, socio-economic collusive networks, poor corporate governance mechanism along with weak legal system provide these firms an opportunity to pass on their risk to the creditors (banks). Research limitations/implications The data set does not contain factors characterizing inter-industry heterogeneity, therefore, the authors use mean industry leverage and mean industry profitability to explore if any relationship exists between leverage of firms, and their respective industry leverage/profitability. Practical implications Pakistani non-financial firms are highly leveraged increasing their probability to face financial distress in erratic economic conditions. As such, the policy makers need to develop capital markets of Pakistan to enable a resilient corporate capital structure. Further, erratic economic conditions of Pakistan create uncertain business environment yielding short-term opportunities and to finance them Pakistani firms use short-term debt as a main financing source. The policy makers need to improve corporate governance mechanism and strengthen legal system that will go a long way to develop Pakistani capital market on sound and sustainable footing. Originality/value This is the first study that uses an extended number of variables and discovers financial behavior of firms in a bank-based economy having limited financing options, and facing erratic economic conditions.

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Effect of Equity Financing Options on Financial Performance of Non-Financial Firms Listed at the Nairobi Securities Exchange, Kenya

Applied Economics and Finance ◽

10.11114/aef.v5i4.3398 ◽

2018 ◽

Vol 5 (4) ◽

pp. 160

Author(s):

Benter Omollo Achieng ◽

Willy Muturi ◽

Joshua Wanjare

Keyword(s):

Capital Structure ◽

Corporate Finance ◽

Financial Performance ◽

Ordinary Least Squares ◽

Negative Effects ◽

Equity Financing ◽

Financial Firms ◽

Positive Effects ◽

Retained Earnings ◽

Positive Effect

Corporate finance managers worldwide have for a long time consistently sought to maximize shareholders’ wealth and their firm’s market value through their decisions on firm’s capital structure. However, both scholars and practitioners of corporate finance are yet to agree on the optimal mix of equity and debt that maximizes a firm’s financial performance. The purpose of this study was to examine the effects of equity financing options namely common stock (CS), retained earnings (REN) and total equity (TED) as ratios of total assets on the financial performance measured as return on assets (ROA) and return on equity (ROE) of Kenya’s listed firms. Utilizing panel econometric techniques namely pooled ordinary least squares (OLS), fixed effects (FE) and random effects (RE), the study analyzes the effects of equity variables as ratios of total assets on the financial performance of 40 non-financial firms listed at the Nairobi Securities Exchange between 2009 and 2015. The study’s empirical results show that CS ratio significantly and negatively affects ROA while REN ratio has a statistically significant and positive effect on ROA. Overall, TE ratio positively and significantly affects ROA. On the contrary, ROE is not significantly affected by the equity variables in the sample. While the non-significant effects of equity on ROE find support in Modigliani and Miller’s capital structure irrelevance theory, the positive effects of REN ratio and the negative effects of CS ratio on ROA, which are largely supported by the trade-off theory, may explain the pecking order theory’s prioritization of internal capital sources over debt and equity issuances. Thus, corporate finance managers should find a place for internal financing options particularly retained earnings to maximize equity holders’ returns on assets employed. Additionally, corporate finance managers should endeavour to minimize on the use of CS due to its negative effects on shareholder earnings on their assets. Nonetheless, a reasonable balance between CS and REN should be considered since the positive effect between TE and ROA is an appraisal for an optimum mix of equity financing options.

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Basic Characteristics Of The Greek Export Enterprises That Penetrate In The Central And Eastern European Countries (CEECS): An Empirical Investigation

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v20i1.2199 ◽

2011 ◽

Vol 20 (1) ◽

Author(s):

Stella Karagianni

Keyword(s):

Economic Activity ◽

Empirical Investigation ◽

Field Work ◽

Export Trade ◽

Eastern European ◽

Logit Models ◽

Font Size ◽

Export Activity ◽

Basic Characteristics ◽

Eastern European Countries

This paper deals with a particular aspect of Greek export trade with the CEEC countries.  More specifically an outline of Greek exports evolution to these countries is being attempted. Parallely, having as a base the data provided through field work – carried out in a representative sample of Greek enterprises active in the area- and with the use of Logit models there, was an attempt to lay out the basic characteristics of Greek enterprises which are progressively increasing their export activity to these countries Through the econometric application we concluded that enterprises which increase progressively their export activity to the CEEC have relatively big size and relatively great export experience. The location as well as the branch of economic activity appears to be of no influence on the export behavior of those enterprises.

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Standardization In The Home Building Industry: An Empirical Investigation Into The Compatibility Between Accounting And Estimating Cost Codes

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v8i11.43 ◽

2010 ◽

Vol 8 (11) ◽

Author(s):

Mark D. Law

Keyword(s):

Firm Size ◽

Empirical Investigation ◽

Number System ◽

Large Percentage ◽

Building Industry ◽

Font Size ◽

Numbering System ◽

Home Building

The purpose of this study was to investigate the utilization of standardized cost codes for the estimating and accounting functions related to the scale of operations by Pennsylvania’s home building contractors.  Firm size was examined as to its impact on three issues in construction standardization practice:  1) the use of a standardized number system for estimating, 2) the use of a standardized number system for accounting, and 3) the use of the same standardized number system for both estimating and accounting.  Significant differences existed among firm sizes regarding all three items relating to standardized cost codes - a standardized numbering system used for estimating, a standardized numbering system used for accounting, and the same standardized numbering system used for both estimating and accounting functions.  Overall, however, a large percentage of Pennsylvania home building firms are behind the curve with regard to their knowledge and utilization of standardized cost codes.

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