The Capital Structure Choice: New Evidence for a Dynamic Tradeoff Model

CFA Digest ◽  
2003 ◽  
Vol 33 (2) ◽  
pp. 5-6
Author(s):  
Laurie Effron
Keyword(s):  
Capital Structure ◽  
New Evidence ◽  
Structure Choice ◽  
Capital Structure Choice ◽  
The Capital Structure

scholarly journals How Country Affects the Capital Structure Choice: Literature Review and Criticism

2017 ◽  
Vol 9 (4) ◽  
pp. 1 ◽  
Author(s):  
Daniela Venanzi
Keyword(s):  
Capital Structure ◽  
Sample Selection ◽  
International Studies ◽  
Empirical Testing ◽  
Country Level ◽  
Country Characteristics ◽  
Structure Choice ◽  
Country Effect ◽  
Capital Structure Choice ◽  
The Capital Structure

Recent international financial research finds that not only firm- and industry-specific determinants, but also country-specific factors influence a firm’s capital structure. The paper’s aim is twofold. Firstly, it proposes a systematic view of the international studies on country effect since 2000, by highlighting both similarities and differences in terms of tested hypotheses, country-level determinants, expected relationships. The main outcome is a complete framework of the country characteristics, which mostly affect the capital structure choice as well as their respective theoretical rationale. Secondly, based on the above review, some areas of potential development in empirical testing will be identified, regarding test design, sample selection, dependent variable measurement, statistical methodology: the paper’s objective is to critically discuss the state of the art in this field, to hopefully improve the empirical testing of country effect on leverage in further research.

scholarly journals Statistical Analysis of Causality between Capital Structure and Firm Profitability: Evidence from Bosnia and Herzegovina

2015 ◽  
Vol 1 (1-2) ◽  
pp. 1-11
Author(s):  
Emina Resić ◽  
Jasmina Mangafić ◽  
Tunjo Perić
Keyword(s):  
Capital Structure ◽  
Bosnia And Herzegovina ◽  
Canonical Correlation ◽  
Debt Structure ◽  
Short Term ◽  
The Relationship ◽  
Structure Choice ◽  
Capital Structure Choice ◽  
The Capital Structure

Abstract This research is designed to examine the relationship between the capital structure and profitability of non-financial firms in Bosnia and Herzegovina during the ten years period, from 2003-2012. The goal is to prove the existence of the relationship between the firm’s capital structure choice and its profitability. The analysis is extended by including the debt structure and differentiating between the types of debt such as the long-term and the short-term ones. Canonical correlation and multiple regression analysis are used. The results of the multivariate canonical correlation analysis provide support to a hypothesis that the capital structure and profitability have statistically significant relationships. Furthermore, the findings provide support that firms develop different patterns of profitability depending on the capital structure choice. We found that an increasing proportion of short-term debt and long-term debt in the overall liability of the firm reduces its profitability.

scholarly journals Ownership structure and capital structure: Evidence from the Jordanian capital market (1995-2003)

2006 ◽  
Vol 3 (4) ◽  
pp. 99-107 ◽  
Author(s):  
Ghassan Omet
Keyword(s):  
Capital Structure ◽  
Ownership Structure ◽  
Firm Growth ◽  
Main Stream ◽  
Leverage Ratio ◽  
Growth Prospects ◽  
The Impact ◽  
Structure Choice ◽  
Capital Structure Choice ◽  
The Capital Structure

The capital structure choice has generated a lot of interest in the corporate finance literature. This interest is due to several reasons including the fact that the mix of funds (leverage ratio) affects the cost and availability of capital and thus, firms’ investment decisions. To date, much of the empirical research has been applied on companies listed on advanced stock markets. This literature considered a variety of factors such as company size, profitability, asset tangibility, firm growth prospects and ownership structure as possible determinants of the capital structure choice. This paper examines the finances of Jordanian listed companies and the impact of their ownership structure on the capital structure choice. Based on a panel data methodology (1995-2003), the results indicate that while Jordanian companies are not highly leveraged, their ownership structure does have a significant impact on capital structure, and that much of the main-stream determinants of capital structure are applicable to the Jordanian scene.

scholarly journals Black Spots’ in Capital Structure Studies: The Case of Non-Existing Debt

2015 ◽  
Vol 9 (2) ◽  
pp. 5-23
Author(s):  
Eugene Nivorozhkin
Keyword(s):  
Capital Structure ◽  
Global Financial Crisis ◽  
Dynamic Properties ◽  
Balance Sheet ◽  
Secondary Markets ◽  
East European ◽  
Black Spots ◽  
Structure Choice ◽  
Capital Structure Choice ◽  
The Capital Structure

Evgeny Mikhailovich Nivorozhkin - School of Slavic and East European Studies, University College of London. This paper looks at the issue of dynamic properties of capital structure choice and the persistencein the capital structure choice. This study focuses on what can be characterized as “black spots” in the existing studies - the selection issue, which is manifested in the fact that a nontrivial number of companies occasionally do not have any debt on their balance sheet. The problem of zero debt is akin to truncated and censored regression models, which are useful when the dependent variable is observed in some ranges but not in others. We find strong evidence that the results of the target adjustment studies of capital structure, which use fitted values of debt ratios, can be potentially biased due to failure to correct for censoring due to zero-leverage observations. This paper also looks at the issue of dynamic properties of capital structure choice and the persistence in the capital structure choice and examines the effect of the 2008 global financial crisis on Russian firms’ capital structure choice. Despite the significant differences in fitted values, the models used in this study yield similar qualitative results – the factors that were identified in the literature to exhibit the most robust correlation with leverage work similarly across models and typically in line with expectations. The effect of higher tangibility of assets is a noteworthy exception which, similar to previous studies, seem to indicate that underdeveloped and/or inefficientlegal systems together with thin and illiquid secondary markets for firms’ assets tend to limit the importance of tangible assets as collateral in emerging markets like Russia.

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