scholarly journals Do local governments use municipal companies for off-balance-sheet financing?

2020 ◽  
Vol 7 (54) ◽  
pp. 242-257
Author(s):  
Weronika Stobieniecka ◽  
Anna Białek-Jaworska
Keyword(s):  
Capital Structure ◽  
Corporate Finance ◽  
Local Governments ◽  
Balance Sheet ◽  
Agency Problems ◽  
Ordinary Least Squares ◽  
Explanatory Variables ◽  
The Public ◽  
Debt Capacity

AbstractThis paper investigates whether municipalities in Poland use their municipal companies to increase debt capacity beyond the limitations imposed by the fiscal debt rules. The article presents corporate governance and agency problems on the example of relations between local government units and affiliated companies. We review and link literature on corporate finance, in particular capital structure, and public finance - debt liabilities of municipalities. We analyse a sample of 2,019 observations of municipalities and their municipal companies using the Ordinary Least Squares (OLS) method, where explanatory variables were taken from the public and corporate finance (leverage and its determinants). Results show that long-term debt of municipalities is positively associated with the leverage and size of municipal companies, but it is negatively related to their profitability.

Thai Public Capital Budget and Management Process

2019 ◽  
pp. 206-235
Author(s):  
Arwiphawee Srithongrung ◽  
Kenneth A. Kriz
Keyword(s):  
Local Governments ◽  
Public Investment ◽  
Public Capital ◽  
Capital Budgeting ◽  
Infrastructure Investment ◽  
Budget Process ◽  
Public Infrastructure ◽  
The Public ◽  
Debt Capacity

This chapter describes the public capital budgeting process in Thailand. Public infrastructure is very centralized; local governments do not play a large role in public infrastructure investment. The country's long-term physical planning is fragmented and lacks an effective long-term fiscal planning. The budget process is dominated by senior civil servants in the Bureau of the Budget, the Ministry of Finance, Bank of Thailand, and the National Economic and Social Development Board. Expensive projects financed by long-term debt bypass the budget process, and as a result, a comprehensive list of annually approved projects is unavailable to the public. This leads to public investment being driven almost entirely by debt capacity. Because of these factors, Thai governments have invested too little in public infrastructure, and the infrastructure investment is uneven across sectors.

scholarly journals Deficit, Decay and Deprioritization of Transport Infrastructure in Nigeria: Policy Options for Sustainability

2016 ◽  
Vol 8 (3) ◽  
pp. 55 ◽  
Author(s):  
Lionel Effiom ◽  
Peter Ubi
Keyword(s):  
Local Governments ◽  
Common Knowledge ◽  
Current Data ◽  
Transport Infrastructure ◽  
Sub Saharan Africa ◽  
Short Term ◽  
Road Infrastructure ◽  
The Public ◽  
Sub Saharan

<p>It is common knowledge that Nigeria’s road infrastructure, and indeed the general infrastructure of sub-Saharan Africa, is in a most despicable condition. This paper formalises this observation by providing current data to support the hypothesis. By deploying descriptive and theoretical methodological approaches, it demonstrates that road infrastructure is not only deteriorating but also suffers from a twin evil of deficit and deprioritisation in the public sector’s preferential scale–a state of indifference of sorts. Long and short term policy choices have to be made to urgently address the issue. In the short term, infrastructure concessions, public private partnerships (PPP), pension funds, sovereign wealth fund, savings from reduction in fuel subsidies, leveraging on the Africa Growth and Opportunity Act (AGOA) mechanism–are part of the portfolio of choices that government can readily choose from. In the long term however, the paper recommends increase in the statutory allocation to the states and local governments which would ensure that component units of the federation control more resources to deploy and develop infrastructure in their immediate domain.</p>

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

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.

scholarly journals Pecking order, earnings management and capital structure

Accounting ◽  
2021 ◽  
Vol 7 (6) ◽  
pp. 1389-1394 ◽  
Author(s):  
Novi Swandari Budiarso ◽  
Winston Pontoh
Keyword(s):  
Capital Structure ◽  
Earnings Management ◽  
Stock Exchange ◽  
Agency Problem ◽  
Agency Problems ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Capital Structure ◽  
Debt Capacity

Most of studies imply that firms decrease or increase their debt capacity in context of pecking order theory or agency problems. On this point, the setting of this study is based on two main problems related to capital structure: the first is determining the source of funds for financing investments, and the second is solving the conflict between shareholders and managers, or the agency problem. The objective of this study is to provide evidence about how firms establish their capital structure in relation to pecking order theory and the agency problem by controlling earnings management in the context of Indonesian firms. This study conducts logistic regression on 28 firms in the consumer goods industry listed on the Indonesia Stock Exchange from 2010 to 2017.This study finds that pecking order theory determines the capital structure of most Indonesian firms with high debt. The results imply that agency problems are unable to explain corporate capital structure and earnings management is not effective for motivating Indonesian firms to establish corporate governance.

scholarly journals Capital structure and corporate performance in late Imperial Russia

2018 ◽  
Vol 23 (4) ◽  
pp. 446-481
Author(s):  
Amanda Gregg ◽  
Steven Nafziger
Keyword(s):  
Capital Structure ◽  
Corporate Finance ◽  
Market Power ◽  
Corporate Performance ◽  
Balance Sheet ◽  
Financial Flexibility ◽  
Late Imperial ◽  
Imperial Russia ◽  
Russian Economy ◽  
Accounts Payable

Abstract This article investigates the financing of corporations in industrialization’s early stages by examining new balance sheet data describing all Imperial Russian corporations in 1914. We emphasize differences between two Russian corporation types: share partnerships and A-corporations. Share partnerships issued greater dividends, were less likely to issue bonds, and had larger accounts payable. We find that capital structures varied with age, size, and sector according to modern corporate finance theories and that scaled profits did not demonstrate differential market power across corporation types. Thus, Russian corporations exhibited considerable financial flexibility, and reducing incorporation costs could have benefited the Imperial Russian economy.

scholarly journals Inter- and intra-industry variations of capital structure in the Czech manufacturing industry

2013 ◽  
Vol 61 (7) ◽  
pp. 2623-2629
Author(s):  
Pavlína Pinková ◽  
Sylvie Riederová
Keyword(s):  
Capital Structure ◽  
Manufacturing Industry ◽  
Financial Statements ◽  
Firm Characteristics ◽  
Explanatory Variables ◽  
Tax Shield ◽  
Statistical Framework ◽  
The Impact ◽  
Structure Choice

The objective of the paper is to investigate the existence of inter-industry variations in the capital structure of enterprises of the Czech manufacturing industry and to identify the intra-industry causes of these differences. Three measures of capital structure are employed to determine the inter-industry variations. These are total debt ratio, long-term debt and short-term debt ratios. The set of explanatory variables is included to clarify the intra-industry variations. These explanatory variables are size, asset structure, asset utilization, profitability, non-debt tax shield and growth. The paper reports the analysis of capital structure of five distinctive industrial branches, namely the manufacture of beverages, the manufacture of textiles, the manufacture of paper and paper products, the manufacture of chemicals and chemical products, and the manufacture of computer, electronic and optical products. The data come from the financial statements of selected companies and cover a period from 2008 to 2012. The analysis of variance, correlation and regression analyses are used to develop the statistical framework. The paper aims to study the impact of industry and firm characteristics on capital structure choice.

scholarly journals The impact of market timing on capital structure: Evidence from Vietnamese listed companies

2017 ◽  
Vol 1 (Q3) ◽  
pp. 105-120
Author(s):  
Tra Thanh Ngo ◽  
Tuyen Van Tran ◽  
Diep Van Nguyen
Keyword(s):  
Capital Structure ◽  
Market Timing ◽  
Negative Relationship ◽  
Growth Potential ◽  
Leverage Ratio ◽  
The Public ◽  
The Moment ◽  
The Impact ◽  
First Time

This study uses the theory of market timing in considering capital structure of the sample of 430 companies which are listed on Vietnam's stock market and implemented IPO in the period of 2006 - 2012. Following the research method of Alti (2006), the article used the variable HOT to represent the factor of market timing in order to understand the relationship between this variable and leverage variable in the short-term (in the year of IPO) and in the long-term (year of IPO + 1, IPO + 2, ..., IPO + 6). The results showed no statistically significant evidence about the negative relationship between the HOT and leverage ratios. It implies that in the first time that companies issue their share capital to the public, the ―active‖ or ―gloomy‖ situation of market is not related to the leverage ratio at the moment of observation. In addition, the results also showed that variables relating to characteristics of company such as growth potential, profitability and scale have a statistically significant relation to capital structure and tangible has no impact on leverage ratio.

scholarly journals Subsidiarity in the service of regional policy: The perspective from Poland’s West Pomerania region

European View ◽  
2019 ◽  
Vol 18 (1) ◽  
pp. 52-61
Author(s):  
Olgierd Geblewicz
Keyword(s):  
Public Administration ◽  
Development Policy ◽  
Local Governments ◽  
Regional Policy ◽  
Local Level ◽  
Development Planning ◽  
The Public ◽  
Two Stages ◽  
Local Levels

Poland’s local governments, introduced into the public administration system in two stages in 1989 and 1999, have become important actors in the development policy conducted at the national and local levels. Setting up voivodeships—the third-level units of local government—was particularly significant for building strong foundations for a comprehensive regional policy in Poland. Voivodeships create the conditions needed for the long-term economic and social development of their territories. That is why voivodeships should be governed by visionaries rather than administrators. The direct responsibility for regional development planning and programming positions their leaders as the coordinators of development activities in the region and the wise investors of EU funds. Their role must be reflected in the appropriate coordination of development activities at the local level and the ability to offer territorially sensitive financial tools to local communities.

Financial crisis and SME capital structure: Swedish empirical evidence

2019 ◽  
Vol 46 (4) ◽  
pp. 925-941 ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman ◽  
Saeid Homayoun
Keyword(s):  
Financial Crisis ◽  
Capital Structure ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Ordinary Least Squares ◽  
Data Availability ◽  
Cross Sectional ◽  
Content Type ◽  
The Global Financial Crisis

Purpose The purpose of this paper is to empirically examine capital structure determinants of small- and medium-sized enterprises (SMEs) during and after the global financial crisis. Design/methodology/approach Statistical methods, including ordinary least squares and the generalised method of moments, were used to analyse a sample of over 40,800 Swedish SMEs operating in four industries during the 2008–2015 period. Findings The results indicate that the independent variables – i.e. financial crisis, profitability, size, tangibility and industry affiliation – to various degrees explain changes in short-term debt (STD) and long-term debt (LTD) ratios. In particular, the empirical findings indicate that the sampled SMEs tended to rely more on STD and LTD during (2008–2009) than after (2010–2015) the financial crisis. Research limitations/implications Due to data availability, the current study is limited to a sample of Swedish SMEs in four industries covering eight years. Further research could examine the generalisability of these findings by investigating other firms operating in other industries and other countries. Originality/value This study is one of few examining determinants of short- and long-term SME debt during and after the global financial crisis, using data from a large-scale cross-sectional database.

scholarly journals Budżet roczny - narzędzie stabilizacji czy destabilizacji systemu finansowego JST?

2017 ◽  
pp. 89-103
Author(s):  
Marek Dylewski
Keyword(s):  
Local Government ◽  
Financial Management ◽  
Local Governments ◽  
Financial Stability ◽  
Research Question ◽  
Financial System ◽  
Point Of View ◽  
The Public ◽  
Annual Budget

The objective of this study is to answer the question should the annual budget continue to be the basic document and the basis for the financial management of local governments, or is it necessary to make changes in the budget system. These doubts arise from the research question: whether the referred annual budget in the current conditions is a tool of stabilization of the financial system of local government units or not? Introduced in the Public Finance Act of 2009, the system of two independent documents, i.a. the annual budget and the long-term financial forecast, without specification of hierarchy, relationship and connection between these documents, does not lead to financial stability of local government from both the point of view of implementation of the budget and the consequences of decisions made by the local government authorities. The lessons that have been learned indicate that the annual budgeting is increasingly leading to destabilization of the financial system of local government units

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