scholarly journals The relationship between government ownership, firm performances and leverage: An analysis from Malaysian listed firms

2013 ◽  
Vol 10 (4) ◽  
pp. 47-60
Author(s):  
Nazrul Hisyam Ab Razak ◽  
Normaizatul Akma Saidi ◽  
Fauziah Mahat
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Agency Cost ◽  
Government Support ◽  
Inverse Association ◽  
Governance Mechanism ◽  
Government Ownership ◽  
Corporate Managers ◽  
Listed Firms ◽  
The Impact

The purpose of this paper is to examining the impact of government ownership on firm performance and leverage in Malaysia. In this paper, we examine governance mechanism and firm performance and leverage of 200 Malaysian firms over 5 year periods from 2005 - 2009. We use fixed effect panel regression model in predicting capital structure of Malaysian firms. We use two indicators as independent variables which are debt ratio and debt over equity ratios. This paper is to determine whether after controlling firm specific characteristics such as corporate governance, agency cost, growth, risk and profitability, government involvement will influence decision on debt policy of the firm. This study may enable the firms to make better decision on their external financing. The inverse association of leverage and profitability implies that the firms are able to get the required capital easily due to the higher level of profits. The existence of government support and backup also will ensure the level in the firms is at the controllable. Therefore, the findings will be able to add new knowledge to the corporate managers and policy makers especially on decision-making on capital structure.

scholarly journals Capital Structure and Performance of Deposit Money Banks in Nigeria

2021 ◽  
Vol 17 (4) ◽  
pp. 130
Author(s):  
Osareme Erhomosele
Keyword(s):  
Regression Analysis ◽  
Theoretical Model ◽  
Firm Performance ◽  
Capital Structure ◽  
Agency Cost ◽  
Return On Equity ◽  
Legal Control ◽  
And Performance ◽  
The Impact ◽  
The Relationship

Investigations into the relationship between capital structure and firm performance over the years have consistently produced mixed results in the light of prevailing theories relevant to the concept of capital structure. The study examined the nature of the relationship between the capital structure of Deposit Money Banks (DMBs) in Nigeria and the trend of performance recorded in the industry. Leverage was adopted as a surrogate for capital structure, while firm performance was proxied by profit efficiency and return on equity. A regression analysis test was applied to a balanced panel data, pooled from a sample of 11 DMBs to determine the impact of capital structure on performance. The study found evidence that supports a non-monotonic relationship between capital structure and performance of DMBs, as predicted by the agency cost theoretical model. A major recommendation elicited from the findings of the study advocates for legal control on the proportion of debt DMBs can include in their capital structure if they are to operate as efficiently as expected.

scholarly journals Capital structure and firm performance in emerging economies: An empirical analysis of Sri Lankan firms

2011 ◽  
Vol 8 (4) ◽  
pp. 253-263 ◽  
Author(s):  
Athula Manawaduge ◽  
Anura De Zoysa ◽  
Khorshed Chowdhury ◽  
Anil Chandarakumara
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Empirical Analysis ◽  
Emerging Market ◽  
Negative Relationship ◽  
Sri Lankan ◽  
Short Term ◽  
Corporate Managers ◽  
Debt Capital ◽  
The Impact

This paper offers an empirical analysis of the impact of capital structure on firm performance in the context of an emerging market—Sri Lanka. The study applies both pooled and panel data regression models for a sample of 155 Sri Lankan-listed firms. The results demonstrate that most of the Sri Lankan firms finance their operations with short-term debt capital as against the long-term debt capital and provide strong evidence that the firm performance is negatively affected by the use of debt capital. The study also finds a significant negative relationship between tangibility and performance indicating inefficient utilization of non-current assets. The negative performance implications associated with over-utilization of short-term debts and the under-utilization non-current assets provide corporate managers with useful policy directions.

scholarly journals Capital Structure Decisions and Corporate Performance: Evidence from Chinese Listed Industrial Firms

2018 ◽  
Vol 7 (2) ◽  
pp. 562
Author(s):  
Ratnam Vijayakumaran
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Fixed Effects ◽  
Equity Capital ◽  
Debt Financing ◽  
Governance Mechanism ◽  
Industrial Firms ◽  
Listed Firms ◽  
Performance Effects ◽  
Fixed Effects Regression

Market imperfections such as taxes, asymmetric information and agency problems make capital structure decisions relevant to the value of the firm. More specially, the agency theory suggests that debt financing is one of the governance mechanisms to mitigate agency costs of equity capital and thus to enhance firm performance. This paper provides new empirical evidence on the performance effects of capital structure decisions using a large panel of Chinese listed industrial firms. Using fixed effects regression method, the study finds that leverage is positively related to firm performance, suggesting that debt financing now acts as a governance mechanism for Chinese listed firms to enhance their performance.

The Impact of Capital Structure on Firm Performance of Vietnamese Non-financial Listed Companies Based on Agency Cost Theory

2019 ◽  
Vol 35 (2) ◽  
Author(s):  
Thao Tran Thi Phuong ◽  
Anh Thuy Nguyen
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Corporate Finance ◽  
Financial Economics ◽  
Cost Of Capital ◽  
Agency Cost ◽  
American Economic Review ◽  
Banking And Finance ◽  
The Cost ◽  
The Impact

This paper investigates the impact of capital structure on firm performance using a sample of 3,122 observations of 446 non-financial listed companies on the Vietnam stock market during 2011-2017. Using firm performance measures, namely ROE and Tobin Q, we examined if higher leveraged firms are more efficient or less in their performance. We employed the fixed effect model to prove that there is an inverse U-shaped relationship between leverage and ROE, and then we can find a preferred capital structure for Vietnam non-financial firms. To deal with endogeneity problem of the leverage variable, we employ two stage least squares (2SLS) regression with instrument variable estimators, which helps us strengthen the above results. Keywords Capital structure, firm performance, leverage, efficiency, instrument variable estimator, agency cost theory References [1] J. Abor, The effect of capital structure on profitability: an empirical analysis of listed firms in Ghana, Journal of Risk Finance. 6 (2005) 438-447.[2] M. Baker, J. Wurgler, The Determinants of Capital Structure: Capital Market-Oriented versus Bank-Oriented Institutions, Journal of Financial and Quantitative Analysis. 43 (2002) 59-92.[3] A.N. Berger, E. Bonaccorsi di Patti, Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry, Journal of Banking and Finance. 30 (2006) 1065-1102.[4] J. Berk, P. DeMarzo, J. Harford, Fundamentals of Corporate Finance, second edition, Prentice Hall, 2012.[5] A.A. Berle, G.C. Means, The Modern Corporation and Private Property, New York: The Macmillan Company, 1932.[6] V. Dawar, Agency theory, capital structure and firm performance: Some Indian evidence. Managerial Finance. 40(12) (2014) Số trang.[7] T.H.V. Duong, A study of the factors affecting the capital structure of the companies listed on Vietnam stock market, Doctoral thesis - National Economics University, 2014.[8] S.J. Grossman, O.D. Hart, Corporate financial structure and managerial incentives, In M. J.J., The economics of information and uncertainy, University of Chicago Press, 1982.[9] M. Jensen, Agency cost of free cash flow, corporate finance and takeovers, American Economic Review Papers and Proceedings. 76 (1986) 323-329.[10] J.C. Jensen, W.H. Meckling, Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics. 3 (1976) 305-360.[11] A. Kraus, R.H. Litzenberger, A State-Preference Model of Optimal Financial Leverage, Journal of Finance. Tập (1973) 911-922.[12] D. Margaritis, M. Psillaki, Capital structure and firm efficiency, Journal of Business Finance and Accounting. 34 (2007) 1447-1469.[13] D. Margaritis, M. Psillaki, Capital structure, equity ownership and firm performance, Journal of Banking and Finance. 34 (2010) 621-632.[14] F. Modigliani, M. Miller, The cost of capital, corporation finance, and the theory of investment, American Economic Review. 48 (1958) 655-669.[15] F. Modigliani, M. Miller, Corporate income taxes and the cost of capital: A correction, American economic Review. Tập (1963) 433-443.[16] S.C. Myer, Determinants of corporate borrowing, Journal of Financial Economics. Tập (1977) 147-175.[17] S.C. Myers, N.S. Majluf, Corporate Financing and Investment Decisions When firms have information that investors do not have, Journal of financial economics. 13 (1984) 187-221.[18] B. Seetanah, K. Seetah, K. Appadu, K. Padachi, Capital structure and firm performance: evidence from an emerging economy, The Business and Management Review. 4 (2014) 185-196.[19] S. Titman, R. Wessels, The determinants of capital structure choice. Journal of Finance. 43(1) (1988) 1-19.[20] L. Weill, Leverage and Corporate Performance: Does Institutional Environment matter? Small Business Economics. 30 (2008) 251-265.[21] J. Williams, Perquisites, risk and capital structure, Journal of Finance. 42 (1987) 29-49.[22] R. Zeitun, M.M. Haq, Debt maturity, financial crisis and corporate performance in GCC countries: a dynamic-GMM approach, Afro-Asian J. Finance and Accounting. 5 (2015) 231-247.

scholarly journals Struktur Modal dan Kinerja Perusahaan (Studi pada perusahaan yang terdaftar di Bursa Efek Indonesia periode 2011 s/d 2012)

2014 ◽  
Vol 5 (1) ◽  
Author(s):  
Novi S Budiarso
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Firm Value ◽  
Stock Exchange ◽  
Optimal Level ◽  
Stock Exchanges ◽  
Listed Firms ◽  
Total Debt ◽  
The Impact

Abstract This paper examine the impact of capital structure on firm performance, in Indonesian Stock Exchange. Firm performance are analyzed from the side of accounting indicators, in this research use liquidity. Because the optimal level of debt of the firm is limited by the liquidity of the assets and it depends on the average usage of the debt in the particular industry. In the other side liquidity  is  conventionally  seen  as  reflecting  investors’  degree  of  risk -aversion, The study collects  of listed firms in Indonesian Stock Exchanges during 2011 to 2012. The listed firms on sub sector trade, services and investment. Multiple Regression analysis approach was employed in carrying out this analysis. Specifically, determined the simultaneous relationships among the various variables. The results show that as partial total debt to asset significantly influences to company’s performance but long term debt to asset not significantly influences to company’s performance. Simultaneously, total debt to asset and  long term debt to asset influences company’s performance. This evidence is consistent with models of optimal capital structure and with the hypothesis that debt level changes release information about changes in firm value/performance.

The impact of intellectual capital on firm performance: a study of Indian firms listed in COSPI

2018 ◽  
Vol 19 (5) ◽  
pp. 935-964 ◽  
Author(s):  
Neha Smriti ◽  
Niladri Das
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Secondary Data ◽  
Share Price ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose The purpose of this paper is to examine the effect of intellectual capital (IC) on financial performance (FP) for Indian companies listed on the Centre for Monitoring Indian Economy Overall Share Price Index (COSPI). Design/methodology/approach Hypotheses were developed according to theories and literature review. Secondary data were collected from Indian companies listed on the COSPI between 2001 and 2016, and the value-added intellectual coefficient (VAIC) of Pulic (2000) was used to measure IC and its components. A dynamic system generalized method of moments (SGMM) estimator was employed to identify the variables that significantly contribute to firm performance. Findings Indian listed firms appear to be performing well and efficiently utilizing their IC. Overall, human capital had a major impact on firm productivity during the study period. Furthermore, the empirical analysis showed that structural capital efficiency and capital employed efficiency were equally important contributors to firm’s sales growth and market value. The growing importance of the contribution of IC to value creation was consistently reflected in the FP of these Indian companies. Practical implications This study has robust theoretical grounds and employs a validated methodology. The present study extends knowledge of IC among academicians and managers and highlights its contribution to value creation. The findings may help stakeholders and policymakers in developing countries properly reallocate intellectual resources. Originality/value This study is the first study to evaluate IC and its relationship with traditional measures of firm performance among Indian listed firms using dynamic SGMM and VAIC models.

scholarly journals Determinants of Capital Structure within the Context of Corporate Governance in Egypt

2018 ◽  
Vol 13 (8) ◽  
pp. 26 ◽  
Author(s):  
Hanaa A. El-Habashy
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Emerging Economy ◽  
Managerial Ownership ◽  
Listed Firms ◽  
Western Countries ◽  
Specific Factors ◽  
The Impact ◽  
The Capital Structure

This study aims to investigate the characteristics of corporate governance that impact the capital structure decisions in listed firms in Egypt, to test the efficiency of the research results conducted in the developed Western countries in an emerging economy. A sample of 240 observations from the most active non-financial companies collected in the period 2009-2014 was used for hypothesis testing. Multiple regression models (OLS) were used for data analysis. Seven variables are used in measuring the attributes of corporate governance; they are the managerial ownership, institutional shareholding, shares owned by a large block, board size, board composition, separation of CEO/Chair positions and audit type. Four ratios were calculated for measuring the capital structure, they are long-term and short-term debt to assets, total debt to assets and debt to equity. The results suggest that corporate governance attributes have a significant impact on the capital structure decisions of listed Egyptian companies. In addition, firm-specific factors such as profitability, tangibility, growth opportunities, corporate tax, firm size and non-debt tax shields influence the choice of capital structure in Egypt. The results showed the same relationship with what was obtained in developed Western countries. The paper offers some contribution in the literature and helps to understand the impact of corporate governance on Egypt's capital structure as an emerging economy.

scholarly journals Stock Liquidity, Financial Report Quality, Wedge, and The Propensity to Pay Dividend

2019 ◽  
Vol 12 (3) ◽  
pp. 239
Author(s):  
Rahmat Setiawan ◽  
Nova Christiana ◽  
Sanju Kumar Singh
Keyword(s):  
Agency Conflicts ◽  
Probit Regression ◽  
Government Ownership ◽  
Stock Liquidity ◽  
Financial Report ◽  
Listed Firms ◽  
Report Quality ◽  
Liquidity Measures ◽  
Propensity To Pay ◽  
The Impact

This research examined the effect of stock liquidity on the propensity to pay dividend for 254 Indonesian public listed firms during the period of l 2011 and 2015. Stock liquidity implies transparency level and serves as market monitor for management performance in using the cash flow. Furthermore, this research examines the impact of stock liquidity on dividend payment in the presence of agency conflicts using agency proxies, wedge and government ownership. This paper employed multivariate probit regression. The baseline model has controlled for time in-variant and industry sectors. Robustness checks are employed to present consistent result for other stock liquidity measures. The results confirm the predicted dividend model outcome and prove the contradiction in dividend signaling theory.

scholarly journals Influence of Capital Structure on Corporate Performance of Listed Firm in PSX: Role of External Factors

2021 ◽  
Vol 7 (3) ◽  
Author(s):  
Abdul Hameed ◽  
Farheen Zahra Hussain ◽  
Khawar Naheed ◽  
Muhammad Sadiq Shahid
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Debt Financing ◽  
External Factors ◽  
Least Square ◽  
Total Debt ◽  
Integral Role ◽  
Equity Ratio ◽  
The Impact

Purpose: A company’s capital structure is a blend of its equity and debt financing and is considered a significant factor in the valuation of any firm. The decisions related to capital structure formation play an integral role for the firms, therefore; this research tends to explore the factors of capital structure and their impact on firm performance. For this purpose, financial data for different listed companies in PSX has been gathered, and dividends and taxes are used as firm external factors.  Design/Methodology/Approach: To examine the impact, the panel data has been used for the period 2016-2020 and panel least square has been applied. Findings: The findings suggest that among the variables current ratio, dividends, taxation, total debt to total equity ratio, and the firm size are statistically significant to profitability. The study also concludes that dividends and tax have a greater impact on capital structure and firm performance.   Implications/Originality/Value: Managers and owners of the firms must make sure that their profits are used for future investments rather than payment of debts to avoid bankruptcy.  

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