scholarly journals Impact of Capital Structure on the Performance of Textilesector in Pakistan: Examining the Moderating Effect of Liquidity

2019 ◽  
Vol 5 (1) ◽  
pp. 1-12
Author(s):  
Adeel Akhtar ◽  
Allah Bakhsh ◽  
Mehak Ali ◽  
Shazia Kousar
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Performance Measures ◽  
Negative Impact ◽  
Least Square ◽  
Debt Ratio ◽  
Return On Assets ◽  
Return On Equity ◽  
Earnings Per Share ◽  
Equity Ratio

Purpose: The basic aim of this study is to investigate how capital structure influences the performance of firms from textile sector listed at Pakistan Stock Exchange, taking liquidity of the firms as a moderator. Methodology: Data of 30 listed textile firms is taken from their financial statementsfor a period of ten years from 2007 to 2016.Analysis has been conducted using the Ordinary least square (OLS) regression. Two measures of capital structure (debt ratio and debt-to-equity ratio) have been used to find out its impact on three performance measures (return on assets, return on equity, and earnings per share). Findings: The variable, total debt ratio does not have any significant effect on all the three firm performance measures (return on asset, return on equity and earnings per share). Debt-to-equity ratio variable also does not have a significant impact on two firm performance measures (ROA and ROE). It however has a significant, negative impact on EPS. In case of liquidity as a moderator, it is found that liquidity acts as the significant moderator between the debt ratio and return on assets whereas liquidity factor is significant in case of relation between debt –to-equity variable and two performance variables return on assets and earnings per share.. Practical implications: Practically this study is important from managerial perspective as the appropriate decision for choosing a level of capital structure vis-à-vis total assets and total equity is essential for the better performance of the firms.

scholarly journals Impacts of Capital Structure on Performance of Banks in a Developing Economy: Evidence from Bangladesh

2016 ◽  
Author(s):  
Md. Nur Alam Siddik ◽  
Sajal Kabiraj ◽  
Shanmugan Joghee
Keyword(s):  
Capital Structure ◽  
Empirical Studies ◽  
Optimal Level ◽  
Least Square ◽  
Return On Assets ◽  
Policy Makers ◽  
Return On Equity ◽  
Ordinary Least Square ◽  
Earnings Per Share ◽  
Relative Deficiency

Capital structure decision plays an imperative role in firm’s performance. Recognizing the importance, there has been many studies inspected the rapport of capital structure with performance of firms and findings of those studies are inconclusive. In addition, there is relative deficiency of empirical studies examining the link of capital structure with performance of banks in Bangladesh. This paper attempted to fill this gap. Using panel data of 22 banks for the period of 2005-2014, this study empirically examined the impacts of capital structure on the performance of Bangladeshi banks assessed by return on equity, return on assets and earnings per share. Results from pooled ordinary least square analysis show that there are inverse impacts of capital structure on bank’s performance. Empirical findings of this study is of greater significance for the developing countries like Bangladesh because it will call upon concentration of the bank management and policy makers to pursue such policies to reduce reliance on debt and to accomplish optimal level capital structure. This research also contributes to empirical literatures by reconfirming (or otherwise) findings of previous studies.

scholarly journals Analisis Pengaruh Return on Assets, Debt to Equity Ratio dan Return on Equity terhadap Earnings Per Share (Studi Empiris pada Perusahaan Sektor Industri Dasar dan Kimia yang Terdaftar di BEI Periode 2014-2018)

2021 ◽  
Vol 5 (3) ◽  
pp. 255
Author(s):  
Sanny Sanny
Keyword(s):  
Data Analysis ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Least Square ◽  
Return On Assets ◽  
Return On Equity ◽  
Purposive Sampling ◽  
Earnings Per Share ◽  
Equity Ratio ◽  
Industry Sectors

This study aims to analyze the effect of return on assets, debt to equity ratio, and return on equity to earnings per share. This study took as many as 41 companies in the basic and chemical industry sectors listed on the Indonesia Stock Exchange in the 2014-2018 period determined by purposive sampling technique. Data analysis was performed using the robust least square (RLS) method. The results of the study prove that partially return on assets and return on equity have a significant effect on earnings per share, but the debt to equity ratio has not been able to provide a significant effect on earnings per share. This finding also proves that simultaneous return on assets, debt to equity ratio and return on equity have a significant effect on earnings per share. Penelitian ini bertujuan untuk menganalisis pengaruh return on assets, debt to equity ratio, dan return on equity terhadap earnings per share. Penelitian ini mengambil subjek yaitu sebanyak 41 perusahaan sektor industri dasar dan kimia yang terdaftar di Bursa Efek Indonesia dalam periode 2014-2018 yang ditentukan dengan teknik purposive sampling. Analisis data dilakukan dengan metode robust least square (RLS). Hasil penelitian membuktikan bahwa secara parsial return on assets dan return on equity berpengaruh signifikan terhadap earning per share, namun debt to equity ratio belum mampu memberikan pengaruh yang signifikan terhadan earnings per share. Temuan ini juga membuktikan bahwa secara simultan return on assets, debt to equity ratio dan return on equity berpengaruh signifikan terhadap earning per share.

scholarly journals Capital Structure and its Impact on Financial Performance in Insurance Companies of Nepal

2020 ◽  
Vol 13 (1) ◽  
pp. 89-106
Author(s):  
Bhupal Jaishi
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Negative Impact ◽  
General Structure ◽  
Insurance Companies ◽  
Debt Ratio ◽  
Return On Assets ◽  
Earnings Per Share ◽  
Total Debt ◽  
The Impact

The paper attempts to examine the relationship between capital structure and the financial performance of Nepalese insurance companies.  Return on assets and earnings per share are the dependent variables. Independent variables are total debt ratio, equity to total assets ratio, size, liquidity and tangibility.  This paper uses descriptive as well as causal-comparative research design to examine the general structure of capital structure and financial performance and their relationship. The data were collected from annual reports of listed insurance companies in Nepal. The study is based on 84 observations from 14 insurance companies of Nepal from 2013/14 to 2018/19. The regression models are estimated to test the effect on financial performance variables i.e. return on assets and earnings per share. The result shows that insurance companies having a high debt ratio have better financial performance. An increase in debt ratio and tangibility increase return on assets and an increase in equity, size and liquidity decrease return on assets in the industry. The impact of the debt ratio and tangibility on earning per share is positive and there is the negative impact of equity, size and liquid ratio on earning per share. The major conclusion of this study is that total debt ratio, equity to total assets ratio, leverage, size, liquidity and tangibility are the significant factors in determining the financial performance of Nepalese insurance companies. The insurance companies of Nepal interested to increase financial performance can increase their total debt ratio and tangible assets and decrease equity, firm size, and liquidity ratio.

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.  

scholarly journals Debt Financing and Firm Performance: Evidence from an Emerging South-Asian Country

2019 ◽  
Vol 10 (1) ◽  
pp. 40
Author(s):  
Mohammad Mazibar Rahman ◽  
Umme Khadija Kakuli ◽  
Shahnaz Parvin ◽  
Ayrin Sultana
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Financial Performance ◽  
Negative Influence ◽  
Short Term ◽  
Return On Assets ◽  
Return On Equity ◽  
Firm Financial Performance ◽  
Total Debt

This paper aims to empirically investigate the impact of capital structure choice on the firm performance of the firms listed under the Dhaka Stock Exchange of Bangladesh. Multiple regression has been employed in this research to determine the relationship between the capital structure and the firm’s financial performance. Three ratios of financial performance, i.e., return on assets, return on equity, and gross margin, have been used as a sample of non-financial Bangladeshi companies, selected from 2010 to 2015. The study records numerous findings. First, the result shows a significant negative influence of long-term debt (LTD) and total debt (TTD) on firm financial performance measured by return on assets (ROA), but no significant relationship is found between short-term debt (STD) and this measure of firm’s financial performance. Moreover, the research found that there is no significant effect of short-term debt, long-term debt and total debt on the firm financial performance measured by return on equity (ROE). Finally, the result shows that a significant negative influence of short-term debt and total debt on firm performance measured by GM, but no significant relationship was found between long-term debt and financial performance. In general terms, the results of this study may suggest that capital structure has a negative influence on firms’ financial performance in Bangladesh.

scholarly journals Does CSR Influence Firm Performance Indicators? Evidence from Chinese Pharmaceutical Enterprises

2019 ◽  
Vol 11 (20) ◽  
pp. 5656 ◽  
Author(s):  
Minghui Yang ◽  
Paulo Bento ◽  
Ahsan Akbar
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Financial Indicators ◽  
Social Dimensions ◽  
Return On Assets ◽  
Environmental Aspect ◽  
Return On Equity ◽  
Earnings Per Share ◽  
Corporate Social ◽  
The Impact

This research is carried out in the backdrop of increasing product quality and environmental degradation scandals associated with Chinese Pharmaceuticals in recent years. We examined the data of 125 Chinese Pharmaceuticals between 2010–2016 to investigate the impact of overall corporate social responsibility (CSR) performance as well as the performance on five unique aspects of CSR such as shareholders, employees, customers and suppliers, environmental practices, and the society to gauge the impact of these individual dimensions on the firm’s financial performance. The Hexun rating system is used to gauge a firm’s CSR performance on various stakeholder dimensions as it is one of the widely accepted CSR measurement criteria in China. The firm performance is measured by Tobin’s Q, return on assets (ROA), return on equity (ROE), and earnings per share (EPS) ratios. The outcome of the panel-based regression models reveals that the overall CSR score has a positive and significant influence on a firm’s financial indicators. Moreover, although all the CSR dimensions relate positively to firm performance, the environmental aspect of CSR has the most profound impact on firm performance followed by customers and suppliers, and employees. However, the shareholders and social dimensions have a relatively lesser influence on firm performance. These results imply that Chinese Pharmaceuticals shall further optimize each aspect of CSR performance as it can not only create a favorable brand image for various stakeholders but also results in sustainable financial performance.

Debt Financing and Corporate Finance Performance: A Dynamic Investigation from Nigeria Quoted Firms

2019 ◽  
Vol 1 (1) ◽  
pp. 48-59
Author(s):  
Uzokwe Grace Onyinyechi
Keyword(s):  
Capital Structure ◽  
Coefficient Of Determination ◽  
Positive Sign ◽  
Financial Leverage ◽  
Return On Assets ◽  
Return On Equity ◽  
Explanatory Variables ◽  
Food And Beverage ◽  
Equity Ratio ◽  
State Of Affairs

There are two components of corporate capital. This paper examined the effect of debt financing on the financial performance of quoted firms in Nigeria stock exchange using time series data from 2000-2017. The objective was to examine the controversial findings of scholars on the effect of capital structure on corporate performance of firms.  Return on assets and return on equity was modeled as the function of debt equity ratio, debt ratio, equity ratio, total liability ratio and long term debt ratio. Multiple regressions with the aid of statistical package for social sciences were used as data analysis techniques. Model one found that a correlation coefficient (r) of .872 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .678 which shows that 67.8% of the variation in Return on Assets is attributable to the variations in the financial leverage. Also, the F- value calculated of 8.338 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROA has a calculated value of 242.032 and a corresponding significance value/probability value of .014.   The positive sign of t-value (1.653) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. Model two found that a correlation coefficient (r) of .772 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .639 which shows that 63.9% of the variation in return on equity   is attributable to the variations in the financial leverage. Also, the F- value calculated of 7.644 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROE has a calculated value of 568.906 and a corresponding significance value/probability value of .003.  The positive sign of t-value (3.310) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. We recommend that management of the firms should work very hard to optimize the capital structure in order to increase the returns on equity and assets and that Management of Nigerian firms should increase their commitments into capital structure in order to improve earnings from their business transaction.

Can Capital Structure Affect the Financial Performance of Banks in Turkey?

2018 ◽  
Author(s):  
Merve Tuncay
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Control Variables ◽  
Return On Equity ◽  
Independent Variables ◽  
Earnings Per Share ◽  
Asset Quality ◽  
The Capital Structure

<p>The aim of this study is to investigate the determinants of banks’ financial performance in terms of the capital structure. Annual financial statements of 11 banks traded in Borsa Istanbul are employed for the period of 2006-2016. Return on assets, return on equity and earnings per share are chosen for financial performance measures. The independent variables related to the capital structure are capital adequacy, equity-to-asset, and financial leverage ratios. In addition, macroeconomic variables and bank-specific variables are also considered as control variables for the analysis. The data are analyzed by the panel data regression analysis as it provides more informative finding and less multicollinearity among variables than time series and cross-sectional analyzes.</p><p>The Hausman test results indicate that the random effects model is appropriate for the whole dependent variables. According to the findings; while equity-to-asset ratio affects return on assets positively, amongst the control variables specific to firms, firm size, asset quality and asset growth variables have significant effects on return on assets. It is found no significant effect of independent variables on return on equity, however, it is seen that asset quality has a negative and significant effect. Inflation and interest rates have a significant effect on both variables. Finally, it is seen that equity-to-asset ratio has a positive and significant effect on earnings per share. Only the effect of asset quality on earnings per share is found to be significant among the control variables. Findings of the study are consistent with the previous studies. In addition, the M&amp;M views are not supported by the findings related to return on assets and earnings per share but the return on equity.</p>

Pengaruh Penerbitan Sukuk Ijarah Terhadap Return On Assets, Return On Equity dan Earning Per Share Emiten di Bursa Efek Indonesia Tahun 2009-2013

2015 ◽  
Vol 2 (6) ◽  
pp. 459
Author(s):  
Rianda Ajeng Ardiyanti Putri ◽  
Leo Herlambang
Keyword(s):  
Regression Analysis ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Simple Linear Regression ◽  
Return On Assets ◽  
Return On Equity ◽  
Earnings Per Share ◽  
Analysis Technique ◽  
Equity Ratio ◽  
Independent Variable

Sukuk in Indonesia is growing rapidly with marked Corporate Sukuk issuance reached 65 Sukuk. Within this development also trigger the issuance of Ijarah Sukuk more in demand by the issuer as it is considered more prospective than the Mudharabah Sukuk.This study aimed to determine the issuance effect of Ijarah Sukuk on the financial performance issuer in the Indonesia Stock Exchange in 2009 to 2013. The independent variable in this study is Sukuk to Equity Ratio and the dependent variable in this study are Return on Assets, Return on Equity and Earnings per Share. The analysis technique used is a simple linear regression analysis OLS with 95% of confidence level.The results of this study show that Sukuk to Equity Ratio has significant effect on Return on Assets, but Sukuk to Equity Ratio has not significant effect on Return on Equity and Earnings per Share.

Impact of Research and Development on Firm Performance

2014 ◽  
Vol 4 (1) ◽  
pp. 357 ◽  
Author(s):  
Aimen Ghaffar ◽  
Waseem Ahmed Khan
Keyword(s):  
Firm Performance ◽  
Research And Development ◽  
Return On Assets ◽  
Return On Equity ◽  
Positive Correlation ◽  
Important Concept ◽  
Independent Variables ◽  
Earnings Per Share ◽  
The Impact ◽  
The Relationship

This study has been conducted to see the impact of research and development budget on the performance of the firms. Research and development is an increasingly important concept in order to have success in this era. The paper finds out the relationship between research and development and firm performance. Firm performance is measured through the ratios of return on assets, return on equity and the earnings per share of the firms. The data analyzed by using SPSS. Results confirmed the positive correlation between the dependent and the independent variables. Limitations of the study were shortage of time and studying of a single sector. In future, different other sectors can be studied to see the impact of research and development on their performance.

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