scholarly journals Determinant of Capital structure of Nepalese hydropower companies

Pravaha ◽  
2020 ◽  
Vol 25 (1) ◽  
pp. 149-158
Author(s):  
Prem Lal Rajbanshi
Keyword(s):  
Capital Structure ◽  
Regression Coefficients ◽  
Regression Equations ◽  
Debt Ratio ◽  
Tax Shield ◽  
Total Debt ◽  
Independent Variable ◽  
Debt Tax Shield ◽  
Size Variable

This study examines the effect of profitability, liquidity, size, tangibility and tax shield on capital structure of Nepalese Hydropower Companies. Debt ratio and long term debt to total assets ratio are taken as dependent variable and Profitability, liquidity, size, tangibility and tax shield are as independent variable. The study reveals that tangibility and non debt tax shield are positively influence the total debt where as profitability and liquidity are negatively influence on the total debt decision of the Nepalese Hydropower Companies. The regression coefficients for size are neither consistent nor statistically insignificant in all regression equations indicating that size variable is not the major factor of determinant of total debt as well as long term debt.

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.

A study on the capital structure determinants of FMCG companies in India

2021 ◽  
pp. 2150008
Author(s):  
Poornima BG ◽  
Pushpender Kumar
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Short Term ◽  
Pecking Order Theory ◽  
Factors Affecting ◽  
Tax Shield ◽  
Total Debt ◽  
Debt Tax Shield ◽  
The Capital Structure

Fast Moving Consumers Goods (FMCG) sector is the fastest and the fourth largest sector of the Indian economy. This study attempts to identify the critical factors affecting the financing decisions of 15 FMCG companies using panel framework and tries to investigate whether the factors considered provide convincing explanation as per the capital structure models like peking order theory, trade-off theory and Agency theory developed over a period of time. The data are collected from CMIE Prowess database for the period 2008 to 2019. The variables considered are profitability, size, non-debt tax shield, tangibility, uniqueness, liquidity and origin. It is found that Pooled OLS is the appropriate model for explaining the factors influencing the short-term debt, long-term debt and total debt as the dependent variables. It is evident that the short-term debt of the company is influenced by profitability, non-debt tax shield and liquidity of the company; the long-term debt is influenced by profitability, tangibility and origin of the company; and the total debt is affected by profitability, size and liquidity of the company. The factors which are significant confirm to the expected behavior with respect to pecking order theory of capital structure.

scholarly journals Determinants of Capital Structure for Firms that Provide High Quality Sustainability Reporting

2016 ◽  
Vol 6 (4) ◽  
pp. 22
Author(s):  
Cigdem Vural-Yavas
Keyword(s):  
Capital Structure ◽  
Corporate Sustainability ◽  
Sustainability Reporting ◽  
Short Term ◽  
High Quality ◽  
Sustainability Index ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
Main Determinants

<p>The main objective of this chapter is to understand the determinants of the capital structure of the firms that provide high quality corporate-sustainability reporting. First, all the non-financial companies quoted in Borsa Istanbul (BIST) will be studied in order to see the full picture of the market. Second, all the firms that are included in the computation of the BIST Sustainability Index (XUSRD) will be analyzed as the firms that provide high quality corporate-sustainability reporting. In line with the literature on capital structure variables such as profitability, size, risk, growth, tangibility, non-debt tax shield and ownership structure were picked as the possible determinants of capital structure. Moreover, long- and short-term debt ratios were selected as the proxies for capital structure. Our findings indicate that when capital structure is measured by long-term debt, profitability, size, tangibility, the ratio of free-float outstanding value to total assets, and institutional ownership percentage become the main determinants of capital structure for the whole market. For sustainability index firms, when capital structure is measured by the long-term debt ratio, the main determinants of capital structure become non-debt tax shield and tangibility. On the other hand, for the same type of firms, when capital structure is measured by the short-term debt ratio, tangibility and the ratio of free-float outstanding value to total assets become the main determinants of capital structure.</p>

scholarly journals Role of Business Age, Scale & Risk in Debt Financing Choices for the Pakistani Textile & Apparel Industry

e-Finanse ◽  
2020 ◽  
Vol 16 (3) ◽  
pp. 119-136
Author(s):  
Zahid Bashir ◽  
Muhammad Usman Arshad ◽  
Muhammad Asif ◽  
Muhammad Abbas ◽  
Hasnain Ali
Keyword(s):  
Debt Financing ◽  
Future Research ◽  
Debt Ratio ◽  
Equity Financing ◽  
Tax Shield ◽  
Total Debt ◽  
Textile And Apparel ◽  
Financing Choice

Abstract The motivation for this research enquiry is to identify the role of the business age, size and risk for the choice of debt financing in the textile and apparel sector of Pakistan along with other controlled factors. The textile and apparel sector of Pakistan comprises 464 listed entities as the targeted population while the study randomly finalized 60 firms as the sample after carefully analyzing the required information from the financial statements during the annual revenue streams of 2013-2019. The predicted variable for this research enquiry is measured by short, long and total-debt ratios while the predictor variables include the business age, firm’s scale and risk. In addition, the research includes tax shield, tangibility, liquidity, profitability, and growth as the controlling factors. The study estimated that the choice of total-debt ratio is strongly affected by business age, size and risk along-with tax shield, tangibility, liquidity and profitability while the choice of short-term debt ratio mainly depends upon the firm’s scale and age along with the tax shield. In addition, the choice of long-term debt ratio is strongly explained by the firm’s scale and age along with the tax shield, liquidity and profitability. The estimated evidence provides management with the implications for the textile and apparel sector of Pakistan to consider as significant factors in deciding the debt financing choice of this sector. The estimated evidence of this research enquiry applies to the non-financial textile sector only and cannot be generalized to the financial sector. Future research may enhance the financing choice towards the inclusion of equity financing with the same set of variables.

scholarly journals Impact of Capital Structure on Firm’s Performance: Focusing on Non-financial Listed Egyptian Firms

2019 ◽  
Vol 10 (6) ◽  
pp. 78 ◽  
Author(s):  
Ahmed Sakr ◽  
Amina Bedeir
Keyword(s):  
Capital Structure ◽  
Negative Impact ◽  
Short Term ◽  
Total Debt ◽  
Significant Negative Impact ◽  
Two Measures ◽  
Independent Variable ◽  
Measure Of Performance ◽  
The Impact

The purpose of this paper is to investigate the impact of capital structure decisions on the performance of the firm. The investigation has been performed using a data of 62 listed non-financial Egyptian firms over a period of fourteen years from 2003-2016. This study used two measures for performance the dependent variable which are ROA and ROE, the most common used measures agreed upon on the majority of previous studies. Whereas, for the independent variable “the capital structure, the study uses the three measures of capital structure which are total debt to total assets (TD), total short-term debt to total assets (STD), and total long-term debt to total assets (LTD). The results showed when using ROA as a measure of performance, a significant negative impact of capital structure (TD, STD, and LTD) exists; while in case of using ROE as a measure of performance, there’s a significant negative impact of capital structure only when using STD, otherwise a positive significant impact of capital structure exist.

Nigeria Ailing Industries and the Capital Structure Theory: A Need for Concern

2013 ◽  
Vol 03 (08) ◽  
pp. 31-40
Author(s):  
Ajeigbe Kola Benson ◽  
Fasesin Oladipo Oluwafolakemi ◽  
Ajeigbe Omowumi Monisola
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Stock Exchange ◽  
Capital Intensity ◽  
Structure Theory ◽  
Debt Ratio ◽  
Manufacturing Companies ◽  
Explanatory Variables ◽  
Tax Shield ◽  
Total Debt

It is necessary to identify that what are factors contribute to the firms’ capital structure composition in its operation. Hence the present study was undertaken with the objective of finding out the relationship between capital structure determinants and ailing manufacturing firms of the listed companies in Nigeria. Using a multiple regression analysis, ailing manufacturing companies in Nigeria stock exchange market was examined for the period of 2005-2010. The final sample consists of 14 manufacturing companies. In this study, dependent variable that is, leverage level of the companies, is measured by long-term debt ratio, short term debt ratio and total debt ratio. Capital structure determinants (independent variables) are measured by capital intensity, tangibility, profitability, firm size and non- debt tax shield. Findings showed that the direction of the explanatory variables such as tangibility, profitability, firm size and non-debt tax shields with total debt largely consistent with the explanations of trade-off theory and prove past empirical findings also.

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.

Nonlinear Behaviors in Capital Structure Decisions in Australian Firms

2012 ◽  
Vol 15 (03) ◽  
pp. 1250012 ◽  
Author(s):  
Joshua S. Bahng (d'Arc) ◽  
Hyeong-Chul Jeong
Keyword(s):  
Capital Structure ◽  
Nonlinear Effects ◽  
Debt Ratio ◽  
Cross Sectional ◽  
Explanatory Variables ◽  
Independent Variables ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
New Perspective ◽  
Nonlinear Behaviors

In this paper, we investigated (i) the possible nonlinear effects in the determinants of capital structures and (ii) the nonlinear adjustment behavior of cross-sectional debt ratios in Australian firms. Our analysis utilized the quantile regression methodology and examined the existence of nonlinear relationships for Australian financial data from 1991 through 2007. In our results, we first were able to confirm the existence of nonlinear effects between debt ratio and explanatory variables such as firm size and profitability. However, this nonlinearity was not conspicuous for the independent variables of asset tangibility and non-debt tax shield. Also, the non-linear speeds of cross-sectional debt adjustment were confirmed to exist. This research introduces a new perspective on nonlinear effects into the capital structure literature and subsequently serves as a contribution to the previous literature.

scholarly journals Influence of Debt Maturity on Firm Performance: An International Comparison

2017 ◽  
Vol 9 (5) ◽  
pp. 106
Author(s):  
Ben Said Hatem
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
International Comparison ◽  
Debt Maturity ◽  
Debt Ratio ◽  
Short Term ◽  
Total Debt ◽  
Negative Effect ◽  
Positive Effect

This paper manipulate the effect of capital structure maturity on firm performance. Debt maturity is measured by three ratios (the long term capital structure, the short term capital structure and total debt ratio). We test a sample consisting of 116 firms from Malaysia and 92 firms from Mexico over a period of 7 years from 2005 to 2011. We could not find evidence on the effect of the long term debt ratio on firm performance. However, firms with higher short term capital structure ratio, are less profitable. This result is valid for firms from Malaysia and Mexico. The results of total debt ratio rare mixed. We conclude to a positive effect for firms of Malaysia and a negative effect for firms of Mexico.

Factors affecting financial leveraging for BSE listed real estate development companies in India

2018 ◽  
Vol 23 (3) ◽  
pp. 274-294
Author(s):  
Rakesh Kumar Sharma
Keyword(s):  
Real Estate ◽  
Capital Structure ◽  
Short Term ◽  
Firm Level ◽  
Content Type ◽  
Factors Affecting ◽  
Tax Shield ◽  
Total Debt ◽  
Real Estate Sector

PurposeThe real estate sector in India has assumed growing importance with the liberalisation of the economy. Developments in the real estate sector are being influenced by the developments in the retail, hospitality and entertainment (e.g. hotels, resorts and cinema theatres) segment, economic services (e.g. hospitals, schools) and information technology-enabled services (such as call centres), and vice versa. This paper aims to study the determinants of capital structure by taking into account 125 major Bombay Stock Exchange (BSE) listed real estate companies selected on the basis of their market capitalisation.Design/methodology/approachTo discover what determines capital structure, nine firm level explanatory variables (profitability-EBIT margin, return on assets, earnings volatility, non-debt tax shield, tangibility, size, growth, age debt service ratio and tax shield) were selected and regressed against the appropriate capital structure measures, namely, total debt to total assets, long-term debts to total assets, short-term debts to total assets, total liabilities to total liabilities plus equity, total debt to capital used and total debt to total liabilities plus equity. A sample of 125 real estate companies was taken and secondary data were collected. Consequently, multivariate regression analysis was made based on financial statement data of the selected companies over the study period of 2009-2015.FindingsThe major findings of the study indicated that profitability, size, age, debt service capacity growth and tax shield variables are the significant firm-level determinants.Research limitations/implicationsThe present study is carried out by taking data of only 25 companies listed on the BSE and time period covered from 2009 from 2015. Time period and sample size may be limitations of the current study.Practical implicationsThe present study is an empirical analysis of the determinants of leverage of real estate sector in India with most recent available data. Different regression equations have been formed to develop the models using firm-specific determinants and different measures of leverage or capital structure. Data were regressed using SPSS application software, and the resulting (or obtained) regression outputs are analysed. This study will help the Indian real estate companies to the know the impact of different variables while raising short-term and long-term loans.Social implicationsThe current study will benefit all stakeholders of society who are fascinated to be acquainted with the financing of real estate companies and the factors affecting long-term and short-term financing of this sector. Specifically, public engrossed in different modes of investment and financial institution will be the prime gainers.Originality/valueThe present study has been completed using authentic data from the annual reports and database. This study uses explanatory variables and different measures of leverage which were limited in use in previous studies. Moreover, this research is a comprehensive study that deals with developing different regression models by using diverse measures of leverage.

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