scholarly journals Determinants of Capital Structure of Agricultural Firms in Kenya

2017 ◽  
Vol 13 (7) ◽  
pp. 277 ◽  
Author(s):  
John Brian Kinyua ◽  
Peter W Muriu
Keyword(s):  
Capital Structure ◽  
Positive Relationship ◽  
Negative Relationship ◽  
Positive Influence ◽  
Annual Data ◽  
Short Term ◽  
Fixed And Random Effects ◽  
Micro Level ◽  
Negative Link

This paper contributes to the capital structure literature by investigating the determinants of capital structure of agricultural firms in Kenya, using annual data for the period 2010-2015. An empirical model to analyze the determinants was specified and estimated using both fixed and random effects estimation techniques. The estimation results provide evidence that profitability, liquidity, age and size of the firm are significant determinants of capital structure. Specifically, the results reveal a negative relationship between profitability and long term debt and a positive relationship between age of the firm and long term debt. We also established a positive influence of age on short term debt, while a negative link is evident between liquidity, the size of the firm and short term debt. The evidence adduced is important for forming credit markets policies for agricultural firms both at the macro and the micro level.

scholarly journals The Effects of Capital Structure on Banks’ Performance, the Ugandan Perspective

2019 ◽  
Vol 67 (3) ◽  
pp. 853-868
Author(s):  
Isah Serwadda
Keyword(s):  
Capital Structure ◽  
Positive Relationship ◽  
Negative Relationship ◽  
Bank Performance ◽  
Short Term ◽  
Return On Assets ◽  
Total Debt ◽  
Net Interest Margin ◽  
Interest Margin

The paper aims to investigate the effects of capital structure on banks’ performance on Ugandan banks for a ten years period, 2006–2015 with a sample of 20 commercial banks. The study employs four performance indicators of return on equity, return on assets, net interest margin and cost to income ratio to determine bank performance. Panel regression models are used to determine the effects of capital structure on bank performance. Independent variables are sub‑divided into capital structure variables namely; long‑term debt to total assets, short‑term debt to total assets and total debt ratio and then control variables are bank size and tangibility of assets. Results portray that there is a positive relationship between capital structure variables and bank performance. It’s between long‑term debts, total debt with net interest margin. There is also a positive relationship between total debt and return on assets. It is still the same between total debt and returns on equity. However, there is a negative relationship between short‑term debt and return on assets. The results also signify a positive relationship between bank size and net interest margin. It is still the same between bank size and returns on equity plus return on assets. There is a negative relationship between the tangibility of assets and net interest margin. It is also the same with return on equity. The findings propose that profitable banks rely more on debt financing as their financing option. This is advanced by the fact that approximately 68 % of total assets are represented by short‑term debts for Uganda’s commercial banks. This further implies that Ugandan banks largely depend on short‑term debt financing for their business operations compared to long‑term debt. Hence the study recommends that executive banking management teams plus policymakers should design prudent financing decisions aimed at reducing overreliance on debts to yield optimal capital structure levels. This will enable banks to remain at the top of the profitability game competitively in the banking industry.

scholarly journals Capital Structure and The Profitability of Listed Retail Firms

2018 ◽  
Vol 10 (1(J)) ◽  
pp. 171-181
Author(s):  
Jason Stephen Kasozi
Keyword(s):  
Capital Structure ◽  
Negative Relationship ◽  
Order Theory ◽  
Debt Financing ◽  
Retail Sector ◽  
Short Term ◽  
Return On Assets ◽  
Pecking Order Theory ◽  
Policy Interventions

The South African retail sector continues to experience a decline in sales and returns amidst growing external competition and a drop in consumer confidence stemming from the recent credit downgrades in the country. Yet, firms in this sector appear to maintain high debt to equity levels. This study investigated whether the capital structure practices of these firms influence their profitability. A Panel data methodology, using three regression estimators, is applied to a balanced sample of 16 retail firms listed on the Johannesburg Securities Exchange (JSE) during the period 2008-2016. The analysis estimates functions relating capital structure composition with the return on assets (ROA). Results reveal a statistically significant but negative relationship between all measures of debt (short-term, long-term, total debt) with profitability, suggesting a possible inclination towards the pecking order theory of financing behaviour, for listed retail firms. Additionally, retail firms are highly leveraged yet over 75% of this debt is short-term in nature. Policy interventions need to investigate the current restrictions on long-term debt financing which offers longerterm and affordable financing, to boost returns. While this study’s methodology differs slightly from earlier studies, it incorporates vital aspects from these studies, and simultaneously specifies a possible model fit.  This helps to capture unique but salient characteristics like the transitional effects of debt financing on firm profitability.  It therefore delivers some unique findings on the financing behaviour of retail firms that both in form policy change, while stimulating further research on the phenomenon. 

scholarly journals Capital Structure and The Profitability of Listed Retail Firms

2018 ◽  
Vol 10 (1) ◽  
pp. 171
Author(s):  
Jason Stephen Kasozi
Keyword(s):  
Capital Structure ◽  
Negative Relationship ◽  
Order Theory ◽  
Debt Financing ◽  
Retail Sector ◽  
Short Term ◽  
Return On Assets ◽  
Pecking Order Theory ◽  
Policy Interventions

The South African retail sector continues to experience a decline in sales and returns amidst growing external competition and a drop in consumer confidence stemming from the recent credit downgrades in the country. Yet, firms in this sector appear to maintain high debt to equity levels. This study investigated whether the capital structure practices of these firms influence their profitability. A Panel data methodology, using three regression estimators, is applied to a balanced sample of 16 retail firms listed on the Johannesburg Securities Exchange (JSE) during the period 2008-2016. The analysis estimates functions relating capital structure composition with the return on assets (ROA). Results reveal a statistically significant but negative relationship between all measures of debt (short-term, long-term, total debt) with profitability, suggesting a possible inclination towards the pecking order theory of financing behaviour, for listed retail firms. Additionally, retail firms are highly leveraged yet over 75% of this debt is short-term in nature. Policy interventions need to investigate the current restrictions on long-term debt financing which offers longerterm and affordable financing, to boost returns. While this study’s methodology differs slightly from earlier studies, it incorporates vital aspects from these studies, and simultaneously specifies a possible model fit.  This helps to capture unique but salient characteristics like the transitional effects of debt financing on firm profitability.  It therefore delivers some unique findings on the financing behaviour of retail firms that both in form policy change, while stimulating further research on the phenomenon. 

scholarly journals Investigation of Co-Integration between Standard and Poor Index and Dow Jones Index in the New York Financial Market

2018 ◽  
Vol 10 (5) ◽  
pp. 197
Author(s):  
Ateyah Alawneh
Keyword(s):  
New York ◽  
Financial Markets ◽  
Negative Relationship ◽  
Global Market ◽  
International Financial Markets ◽  
Annual Data ◽  
Short Term ◽  
Jones Index ◽  
Integration Test

The study investigates the co-integration between (the S&P 500 index)and (Dow Jones index) the DJIA by busing the method Engle-granger co-integration Test. The study use annual data from 1990 to 2016.The study examines the stability of the index of S&P 500 and DJIA using the E-views program through a unit root test. The study found that the indicators are unstable, but they become stable when taking the first difference. This condition integrates (the S&P 500 index) and (the DJIA index) during the long-term co-integration test. The analysis shows that there is a negative co-integration between the two variables. It should be emphasized that the short-term dynamic analysis showed a positive co-integration between both indexes. The study concluded that there is an urgent need to take into account the long-term negative co-integration between (the S&P 500 index) and (the DJIA index) by investors in the New York market. Also, the study considers short-term positive integration between (the S&P 500 index) and (DJIA index), which turns into a negative relationship in the long term when  taking into account the markets linked with the New York market as a major global market and other international financial markets when making any financial investment. The result of this study could help users of major international financial markets in investment diversification to reduce risk.

Do working capital management practices influence investment and financing patterns of firms?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahsan Akbar ◽  
Xinfeng Jiang ◽  
Minhas Akbar
Keyword(s):  
Capital Structure ◽  
Negative Relationship ◽  
Capital Management ◽  
Working Capital ◽  
Short Term ◽  
Working Capital Management ◽  
Content Type ◽  
Investment And Financing ◽  
The Impact

PurposeThe present study aims to investigate the impact of working capital management (WCM) practices on the investment and financing patterns of listed nonfinancial companies in Pakistan for a span of 10 years.Design/methodology/approachThe study is based on secondary financial data of 354 listed nonfinancial Pakistani firms during the period of 2005–2014. The two-step generalized method of moment (GMM) regression estimation technique is employed to ensure the robustness of results.FindingsEmpirical testing reveals that: excessive funds tied up in working capital have a negative impact on the investment portfolio of sample firms. Besides, a negative relationship between change in fixed assets and excess net working capital posits that, eventually, firms use idle resources tied up in short-lived assets to boost their investment activities. Furthermore, larger working capital levels were associated with higher leverage ratio which indicates that firms with inefficient WCM policies have to rely heavily on long-term debt to meet their short-term financing requirements. Additional results indicate that firms that take more time to sell inventory and convert receivables to cash, make more use of debt. Results of cash management models illustrate that cash-rich firms have lower leverage levels which signal the strong financial health and internal revenue generation capability of such firms.Originality/valueThere is a dearth of empirical studies that examine the implications of WCM decisions on a firm's capital structure. Besides, these studies are only confined to how a WCM policy influences the long-term investment activities of a firm. The research contributes to the extant literature by empirically revealing a link between the WCM practices and the firm's long-range investment and financing patterns. Hence, financial managers shall account for the impact of their short-term financial management decisions on the capital structure of the firm.

scholarly journals Corruption, Provincial Institutions and Capital Structure: New Evidence From a Transitional Economy

2017 ◽  
Vol 8 (1) ◽  
pp. 105-117 ◽  
Author(s):  
Le Trung Thanh
Keyword(s):  
Capital Structure ◽  
Negative Impact ◽  
Positive Influence ◽  
Bank Loans ◽  
Short Term ◽  
Robust Tests ◽  
First Time ◽  
New Evidence

Using a unique firm-provincial level panel dataset from 2005 to 2011, this study for the first time investigates the role played by corruption and provincial institutions in determining a company’s capital structure in Vietnam’s legal environment. Contrasting to the majority of previous studies, the results show that corruption has an insignificant influence on a company’s bank loans, consistent with institutional theory. However, the role of corruption is different for types of various capital structures after controlling for both unobservable characteristics and endogeneity problems. More specifically, corruption has significantly positive influence on short-term capital structure, but a negative impact on long-term loans. All of these results hold after a series of robust tests.  

scholarly journals Efficiency and Determinants of Capital Structure in the Greek Pharmaceutical, Cosmetic and Detergent Industries

2021 ◽  
Vol 14 (12) ◽  
pp. 579
Author(s):  
Ioannis E. Tsolas
Keyword(s):  
Capital Structure ◽  
Low Cost ◽  
Negative Relationship ◽  
Ordinary Least Squares ◽  
Short Term ◽  
Firm Efficiency ◽  
Tangible Assets ◽  
Significant Negative Relationship ◽  
Short And Long Term

The purpose of this paper is to investigate the relationship between a firm’s capital structure (i.e., leverage) and its operating environment, taking into account firm (i.e., efficiency, asset structure, profitability, size, age and risk) and industry effects. For a sample of Greek pharmaceutical, cosmetic and detergent (PCD) enterprises, firm efficiency was estimated using bootstrapped data envelopment analysis (DEA), and a leverage model was produced using ordinary least squares (OLS) regression. The findings confirm the significance of firm efficiency (i.e., the franchise-value hypothesis over the efficiency-risk hypothesis) and asset structure on leverage. Efficiency and overall and short-term leverage have a significant negative relationship, indicating that more efficient firms tend to choose a relatively low debt ratio. Pharma firms are more affected since they are less efficient than cosmetics and detergents firms. Furthermore, asset structure and short- and long- term leverage have a significant negative and positive relationship, respectively, indicating that the firms with more tangible assets have less short-term debt and more long-term debt in their capital structure. Cosmetic and detergent firms, which have slightly more tangible assets than pharma firms, appear to be able to substitute high-cost, short-term debt with the low-cost, long-term debt by using such assets as collateral.

scholarly journals HOW TENURE OF SUKUK ISSUANCES IMPACTS THE ECONOMIC GROWTH IN MALAYSIA?

2019 ◽  
Vol 1 (1) ◽  
pp. 01-12
Author(s):  
Siti Sarah Mohd Zaki Fadzil ◽  
Noraziah Che Arshad
Keyword(s):  
Economic Growth ◽  
Central Bank ◽  
Positive Relationship ◽  
Time Series Data ◽  
Negative Relationship ◽  
Unit Root Test ◽  
Series Data ◽  
Short Term ◽  
The Impact

The present paper analyses the impact of Sukuk issuances on the economic growth of Malaysia over a period of 10 years from 2008 to 2017 on a yearly basis. There are six different types of Sukuk issuances which includes the long-term government/treasury/central bank (LGTC), long-term corporate (LCTE), long-term agency (LAGY), short-term government/treasury/central bank (SGTC), short-term corporate (SCTE) and short-term agency (SAGY) with the presences of the moderating variable which is the exchange rate (ER). The 10 years’ time-series data were analyzed by using the diagnostic test, unit root test and multiple regression analysis. The outcome of the study indicates that the presence of the ER, LCTE, SGTC, SCTE, and SAGY found to have a significant and positive relationship with the economic growth (GDP) of Malaysia. However, LGTC found not to be significant but shows a positive relationship with the GDP in Malaysia, whilst LAGY is found to be significant but shows a negative relationship with the GDP in Malaysia. Therefore, the Sukuk issuances give an impact on the economic growth of Malaysia, whereby with the presences of the moderating variable, the long-term and short-term Sukuk issuances can spur the economic growth of Malaysia.

scholarly journals Estructura de capital, concentración de propiedad y política de dividendos como factores determinantes de problemas de agencia en empresas chilenas

2020 ◽  
Vol 22 (1) ◽  
Author(s):  
Roberto Vallejos Villa
Keyword(s):  
Capital Structure ◽  
Agency Costs ◽  
Positive Relationship ◽  
High Growth ◽  
Managerial Discretion ◽  
Short Term ◽  
Linear Effect ◽  
Management Efficiency ◽  
Turnover Ratio ◽  
Asset Turnover

The objective of this paper is to analyze the capital structure, the concentration of property and the policy of dividends as determinants of the problems of agency in Chilean companies. As a measure of agency costs, the asset turnover ratio was used as a benchmark for management efficiency in the use of the company's assets, which is an inverse measure of agency costs. The results show that a higher level of indebtedness seems to favor the discretional behavior of managers. However, there is also evidence that when the debt is a short-term debt, the divergence of interest decreases between shareholders and managers. The concentration of property on the other hand has a non-linear effect on the costs of agency, which means that, first, it acts as a mechanism to attenuate managerial discretion, but when it reaches a certain level, an effect of expropriation of major shareholders over minor shareholders seems to be produced. In relation to the dividend policy, a positive relationship is observed with efficiency in the use of assets, mainly in the presence of high growth opportunities.

scholarly journals Will the COVID-19 pandemic lead to a tsunami of suicides? A Swedish nationwide analysis of historical and 2020 data

2020 ◽  
Author(s):  
Christian Rück ◽  
David Mataix-Cols ◽  
Kinda Malki ◽  
Mats Adler ◽  
Oskar Flygare ◽  
...  
Keyword(s):  
Negative Impact ◽  
Annual Data ◽  
Short Term ◽  
Death Rates ◽  
Men And Women ◽  
Influenza Pandemics ◽  
Suicide Rates ◽  
Distributed Lag ◽  
The Media

ABSTRACTBackgroundVarious surveys have documented a negative impact of the COVID-19 pandemic on the population’s mental health. There is widespread concern about a surge of suicides, but evidence supporting a link between global pandemics and suicide is very limited. Using historical data from the three major influenza pandemics of the 20th century, and recently released data from the first half of 2020, we aimed to investigate whether an association exists between influenza deaths and suicide deaths.MethodsAnnual data on influenza death rates and suicide rates were extracted from the Statistical Yearbook of Sweden from 1910-1978, covering the three 20th century pandemics, and from Statistics Sweden for the period from January to June of each year during 2000-2020. COVID-19 death data were available for the first half of 2020. We implemented non-linear autoregressive distributed lag (NARDL) models to explore if there is a short-term and/or long-term effect of increases and decreases in influenza death rates on suicide rates during 1910-1978. Analyses were done separately for men and women. Descriptive analyses were used for the available 2020 data.FindingsBetween 1910-1978, there was no evidence of either short-term or long-term significant associations between influenza death rates and changes in suicides. The same pattern emerged in separate analyses for men and women. Suicide rates in January-June 2020 revealed a slight decrease compared to the corresponding rates in January-June 2019 (relative decrease by −1.2% among men and −12.8% among women).InterpretationWe found no evidence of short or long-term association between influenza death rates and suicide death rates across three 20th century pandemics or during the first six months of 2020 (when the first wave of COVID-19 occurred). Concerns about a substantial increase of suicides may be exaggerated. The media should be cautious when reporting news about suicides during the current pandemic.

Sign in / Sign up

Export Citation Format

Share Document