scholarly journals Determinants of capital structure: evidence from Jordanian service companies

2020 ◽  
Vol 17 (2) ◽  
pp. 364-376
Author(s):  
Omar K. Gharaibeh ◽  
Saqer AL-Tahat
Keyword(s):  
Capital Structure ◽  
Secondary Data ◽  
Agency Cost ◽  
Debt Ratio ◽  
Business Risk ◽  
Pecking Order ◽  
Tax Shield ◽  
Service Companies ◽  
Tax Shields ◽  
The Capital Structure

This paper examines capital structure determinants for service companies in Jordan between 2014 and 2018. Secondary data from 45 companies were analyzed using the panel regression approach. The results show that the independent variables, suggested as capital structure determinants, have an effect on the debt ratio made by the service companies. Size and non-debt tax shield have a positive significant effect on the debt ratio, while profitability and business risk have a negative significant impact on the debt ratio. In general, the findings support the notion that the trade-off, bankruptcy cost, agency cost and pecking order theories are crucial in explaining the capital structure of Jordanian service companies except for non-debt tax shields and tangibility factors. Jordanian service companies do not use fixed assets as collateral or companies with higher collateral value tend to borrow less debt. Although the coefficient of institutional investors is statistically insignificant, it is still negative and economically significant. This paper concludes that size, profitability, business risk, non-debt tax shields and institutional ownership factors are fundamental in terms of shaping the capital structure in Jordanian service companies.

scholarly journals PENGARUH UKURAN PERUSAHAAN DAN RISIKO BISNIS TERHADAP STRUKTUR MODAL PADA PERUSAHAAN INDUSTRI OTOMOTIF YANG TERDAFTAR DI BURSA EFEK INDONESIA

2019 ◽  
Vol 15 (2) ◽  
pp. 165-187
Author(s):  
Mohamad Ali Wairooy
Keyword(s):  
Capital Structure ◽  
Automotive Industry ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Secondary Data ◽  
Sampling Technique ◽  
Multiple Linear Regression Analysis ◽  
Business Risk ◽  
Exchange Data ◽  
The Capital Structure

This study aims to examine and analyze the effect of partially or simultaneously the size of the company and business risk on the capital structure of the Automotive Industry Company Registered on the Indonesia Stock Exchange. Data collection uses secondary data using purposive sampling technique. The population in this study were all automotive industry companies as many as 17 companies listed on the Indonesia stock exchange for the period 2014-2016, while the samples taken were the number of observations for 3 years (2014-2016). The data obtained were analyzed using multiple linear regression analysis. The results showed that all hypotheses had a positive and significant effect based on t test and F test. This means that both partially and simultaneously the size of the company and business risk had a positive and significant effect on the capital structure of the Automotive Industry Company Listed on the Indonesia Stock Exchange.

scholarly journals The Determinants of Capital Structure: Empirical Analysis of Oil and Gas Firms during 2000-2015

2017 ◽  
Vol 9 (1) ◽  
pp. 1 ◽  
Author(s):  
Aws Yousef Shambor
Keyword(s):  
Financial Crisis ◽  
Capital Structure ◽  
Oil And Gas ◽  
Global Financial Crisis ◽  
Agency Cost ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
The Global Financial Crisis ◽  
Oil And Gas Firms ◽  
The Capital Structure

This study investigates the capital structure determinants of 346 oil and gas firms that are the constituents of the Global Oil and Gas Index (OILGSWD) over the period of 2000 – 2015, taking into account the effect of the Global Financial Crisis of2007-2009 on the determinants of the capital structure. Thus, six firm level explanatory variables (namely: liquidity, profitability, growth, non-debt tax shield, tangibility and size) are selected and regressed against the appropriate capital structure measure, leverage, the ratio of total debt to book value of total assets. The data is collected from secondary sources depending on the data from the DataStream database. The major findings of the study indicate that tangibility, profitability, size, liquidity and non-debt tax shield are the significant determinants of capital structure of oil and gas firms, while growth is considered insignificant. The capital structure is analyzed in terms of the three main theories of capital structure: Trade-off theory, Pecking order theory, and Agency cost theory. Finally, the global financial crisis has to some extent a significant impact on the capital structure determinants of oil and gas firms and has no significant impact on liquidity, as indicated by the OLS regression analysis results.

scholarly journals THE ROLE OF BUSINESS RISK AND NON DEBT TAX SHIELDS ON CAPITAL STRUCTURE: A STUDY BASED ON CEMENT SECTOR IN PAKISTAN

2017 ◽  
Vol 13 (2) ◽  
Author(s):  
Muhammad Asif Joyo ◽  
Keyword(s):  
Statistical Analysis ◽  
Panel Data ◽  
Capital Structure ◽  
Panel Regression ◽  
Business Risk ◽  
Tax Shield ◽  
Tax Shields ◽  
Equity Ratio ◽  
Positive Effect

Objective- The objective of this study is to determine the influence of Business risk and Non Tax shield on Capital structure. Methodology- This study is based on panel data of20 companies from the cement sector of Pakistan. Panel regression is applied for statistical analysis. Conclusion- This study concludes that business risk and non-tax shield has insignificant effect on capital structure (debt to equity ratio), whereas the interest coverage has positive effect on debt to equity ratio. Policy Implication- As per this study the volatility and business risk involved in the cement sector may have some serious issues if the exports is continuously decline and at the same time raising leverage funds may hurt the performance of the company.

scholarly journals Pengaruh Non-Debt Tax Shield Dan Cost Of Financial Distress Terhadap Struktur Modal Pada Perusahaan Sub Sektor Logam Dan Sejenisnya Yang Terdaftar Di Bursa Efek Indonesia (BEI) Tahun 2013-2017

2020 ◽  
Vol 1 (1) ◽  
pp. 55-73
Author(s):  
Muhammad Yusuf ◽  
Andika Kurniawan
Keyword(s):  
Capital Structure ◽  
Financial Distress ◽  
Stock Exchange ◽  
Secondary Data ◽  
Correlation Study ◽  
Positive Influence ◽  
Variable Cost ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
The Capital Structure

This research aims to provide the influence of non-debt variable tax shield and cost of financial distress affect the capital structure of the company's sub-sector metals and the like listed on the Indonesia Stock Exchange in 2013-2017. The method on this research is a quantitative approach with the type of correlation study. The data collection techniques in this study use secondary data with saturated sampling techniques. The population of this research is a metal sub-sector company and the like listed on the Indonesia Stock Exchange (IDX). The samples in this study were as many as 16 metal sub-sector companies and the like listed on the Indonesia Stock Exchange (IDX). The results showed that both the partial and simultaneous variables of the non-debt tax shield and cost of financial distress had no effect on the capital structure of the metal sub-sector companies and the like listed on the Indonesia Stock Exchange ( IDX). It shows that the T-Test in a non-debt tax shield variable is obtained by the T-calculate result of 1.401 and the value of Sig. T. Acquired by 0, 165 > 0.05, then Ho accepted and H1 rejected which means there is no positive influence on the capital structure and in variable cost of financial distress obtained with the result of T-Calculate of 1.756 and the value of Sig. T. Acquired by 0, 083 > 0.05, then Ho is accepted and H1 is rejected which means there is no positive influence on the capital structure. Then simultaneously F test result in can with a fcalculate value of 2.295 with a level of Sig. 0, 108, because of the value of Sig. F > 0.05, then Ho accepted and H1 rejected. This means that there is no variable influence of non debt tax shield (X1) and cost of financial distress (X2) to the capital structure (Y).

scholarly journals Determinants of Capital Structure: Empirical Evidence from Turkey

2018 ◽  
Vol 8 (1) ◽  
pp. 31 ◽  
Author(s):  
Merve Gizem Cevheroglu-Acar
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Tax Shield ◽  
Financial Firms ◽  
Independent Variable ◽  
Debt Tax Shield ◽  
The Relationship ◽  
The Capital Structure

The primary aim of this study is to identify the firm-specific determinants of the capital structure of non-financial firms in Turkey and to test whether the determinants offered by financial theory are able to provide convincing explanations for non-financial firms in Turkey. Because the relationship between liquidity and capital structure is not well examined for Turkish market in the context of capital structure theories, we include liquidity as independent variable in our models in addition to profitability, growth, non-debt tax shields, size, tangibility, and risk. We use panel regression as econometric model and cover the period from 2009 to 2016. Our results show that profitability, non-debt tax shield, size, tangibility, and liquidity are significant determinants of the capital structure, size being the most robust one. On the other hand, growth and volatility are not significantly related with the leverage. Moreover, we conclude that capital structure decisions of non-financial firms in Turkey are mostly consistent with the hypothesis of pecking order theory rather than trade-off theory.

scholarly journals DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS

2021 ◽  
Vol 17 (No.1) ◽  
pp. 81-108
Author(s):  
Georgios Chatzinas ◽  
Symeon Papadopoulos
Keyword(s):  
Capital Structure ◽  
Dynamic Panel Data ◽  
Financial Assistance ◽  
Debt Ratio ◽  
Assistance Programs ◽  
Tax Shield ◽  
Total Debt ◽  
Debt Tax Shield ◽  
The Impact ◽  
The Capital Structure

The present study has investigated the moderating effect of the European Financial Stability Facility (EFSF) / European Stability Mechanism (ESM) support to the firms’ indebtness. Using dynamic panel data, three models were estimated and aimed at the determination of the way that EFSF/ESM financial assistance programs could influence the impact of five firm-specific characteristics, namely growth, profitability, size, tangibility and non-debt tax shield on the capital structure of European firms. Data from 2,086 firms for the period 2003 – 2016 were used, and two dummy variables; one for the EFSF/ESM support period and one for any kind of economic crisis period were formed. The results indicated that pecking order prevailed over trade-off theory. Economic crises did not affect severely the firm-characteristics’ effects, but the EFSF/ESM programs influence appeared in three cases. During the period of EFSF/ESM assistance, profitability’s negative effect on long-term debt ratio disappeared and on total debt ratio strengthened, growth’s positive impact on total debt ratio diminished and non-debt tax shield acquired positive influence on total debt ratio. These changes might be explained by the increased levels of tax rates and decreased levels of uncertainty that the EFSF/ ESM programs caused, as well as by the reluctance of lenders to provide new funds.

scholarly journals Capital Structure Determinants in Property and Real Estate Company in 2013 to 2018

2020 ◽  
Vol 76 ◽  
pp. 01050
Author(s):  
Sautma Ronni Basana ◽  
Tiffany Tandarto ◽  
Christina Soehono
Keyword(s):  
Data Analysis ◽  
Real Estate ◽  
Capital Structure ◽  
Stock Exchange ◽  
The Other ◽  
Company Size ◽  
Business Risk ◽  
Tax Shield ◽  
Real Estate Company ◽  
The Capital Structure

This research is to recognize the factors supporting the property and real estate company in determining the capital structure composition. The population of this research is all the property and real estate company listed on the Indonesia Stock Exchange 2013 to 2018. There are 48 companies listed until 2019. The data analysis employs a stratum test. The results of this research are the company’s performance, profitability influencing the capital structure, growth that does not influence the capital structure, nondebt tax shield influencing capital structure, and liquidity does not influence capital structure. In the company’s risk, the collateral value of assets influences capital structure; on the other hand, the business risk does not influence the capital structure. In the company’s characteristics, company size does not influence the capital structure.

scholarly journals DETERMINASI VARIABEL AKUNTANSI TERHADAP PENENTUAN KEBIJAKAN STRUKTUR MODAL PADA PERUSAHAAN MANUFAKTUR DI INDONESIA

2015 ◽  
Vol 2 (1) ◽  
pp. 47
Author(s):  
Indra Saputra ◽  
Farah Margaretha
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Time Series Data ◽  
Cash Holdings ◽  
Series Data ◽  
Manufacturing Companies ◽  
Business Risk ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
The Capital Structure

<p><em>Decisions incompliance with the company's funds come fromits own capital (</em><em>equity) or by foreign capital (debt). The purpose of this study was to determine the effect of firm size, profitability, business risk, asset structure, cash holdings, non-debt tax shield, signaling and growth effects of capital structure policy. This research was conducted on37samples of companies listed on the Indonesia Stock Exchange(IDX) using time series data from 2008-2011. This study uses multiple linear regression to test the hypothesis to see the contribution of each variable individually and simultaneously in influencing the structure of funding. </em><em>The results show that firm size</em><em>, asset structure, and signaling effect has a positive and significant effect on the capital structure policy. Other variables, namely business risk and cash holdings have a negative correlation and significant effect on the capital structure of these results support the trade of theory and pecking order theory. Further testing of profitability, non-debt tax shield and the growth does not affect the capital structure in manufacturing companies. If the company uses debt funding source soft he factors accounting variables such as firm size, asset structure, business risk and the effect of signaling a decisive factor in the decision making of the company's capital structure policy so as to provide optimal results.</em></p>

scholarly journals Determinan Struktur Modal Dalam Perspektif Pecking Order Theory Dan Agency Theory

Akuntabilitas ◽  
2020 ◽  
Vol 13 (2) ◽  
pp. 191-204
Author(s):  
Nana Umdiana ◽  
Shifa Tivana
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Managerial Ownership ◽  
Manufacturing Companies ◽  
Business Risk ◽  
Pecking Order ◽  
Good Industry ◽  
Pecking Order Theory ◽  
Growth Opportunity ◽  
The Capital Structure

The capital structure seen from the perspective of pecking order theory explains that companies are more likely to prefer internal funding than external companies. Pecking Order Theory explains why highly profitable companies generally have less debt. This study aims to discuss Liquidity, Asset Structure, Business Risk, Growth Opportunity, Managerial Ownership of Capital Structures on Manufacturing Companies of the basic Consumer Good Industry Sector listed on the Indonesia Stock Exchange period 2016- 2019.This type of research is an associative causal research with the type of time series. The sample was selected using the purposive sampling method. Data analyzed amounted to 40. Data was tested using multiple linear regression analysis.The result of this study indicate that Liquidity is significant affect the Capital Structure. Asset Structure, Business Risk, Growth Opportunity, Managerial Ownership did not affect the Capital Structures.

Determinants of capital structure: an empirical study of manufacturing firms in India

2017 ◽  
Vol 59 (6) ◽  
pp. 1029-1045 ◽  
Author(s):  
Rajni Sofat ◽  
Sukhdev Singh
Keyword(s):  
Capital Structure ◽  
Multiple Regression Model ◽  
Manufacturing Firms ◽  
Debt Ratio ◽  
Business Risk ◽  
Service Capacity ◽  
Pecking Order ◽  
Return On Assets ◽  
Risk And Return ◽  
Content Type

Purpose The purpose of this paper is to explore the most significant determinants of capital structure of manufacturing firms in India and to investigate whether the capital structure models derived from foreign research provide convincing explanations for capital structure decisions of Indian firms by using multiple regression model. Design/methodology/approach Different conditional theories of capital structure like trade off theory, pecking order theory and agency theory are reviewed to formulate testable propositions concerning determinants of capital structure of manufacturing firms. Multiple regression model and correlation matrix have been used as statistical tools to investigate the most significant determinants of capital structure of manufacturing firms in India with the help of SPSS Software for a sample of top 100 manufacturing firms listed in BSE. Findings The results suggest that variables like asset composition, business risk and return on assets are positively related to debt ratio whereas firm size and debt service capacity are negatively related to debt ratio. The asset composition, business risk and return on assets appear to be significant determinants of capital structure, while firm size and debt service capacity are insignificant determinants. Research limitations/implications The findings of this study are consistent with predictions of trade off, pecking order and agency theory of finance which helps in understanding financing behaviour of firms in India. Practical implications This study has laid some ground work to explore the determinants of capital structure of Indian firms upon which a more detailed evaluation could be based. Furthermore, empirical findings should help corporate managers to make optimal capital structure decisions. Originality/value To the authors’ knowledge, this study is the first that explores the most significant determinants of capital structure of manufacturing firms in India by using the most recent data. Moreover, this study also confirms that same factors affect the capital structure decisions of firms in developing countries as identified for firms in developed economies.

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