scholarly journals Factors determining capital structure: Evidence from Companies listed on the Hanoi Stock Exchange

2021 ◽  
Vol 5 (2) ◽  
pp. first
Author(s):  
Hồ Xuân Thủy ◽  
Nguyễn Thị Huyền Trang
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Tax Shield ◽  
Factors Influencing ◽  
Fixed Assets ◽  
Debt Tax Shield

This paper investigates the factors influencing capital structure of the companies listed on the Hanoi Stock Exchange (HNX) during 2011-2018. Factors tested included non-debt tax shield, firm size, tangible fixed assets structure, and profitability based on previous studies and the two prominent capital structure theories namely the trade-off theory and the pecking-order theory. We used the variable financial leverage (LEV) to measure capital structure. The analysis employs multiple linear panel regression models in examining factors influencing capital structure, the random effect model (REM) obtained by table data processing was found to be consistent with the study data. Our results revealed that profitability and non-debt tax shield had a negative impact on capital structure. On the other hand, firm size exhibited a positive impact whilst the effect of tangible fixed assets was statistically insignificant. Amongst all tested factors, non-debt tax shield was shown to exert the greatest influence on capital structure of companies. We conclude that the factors influencing capital structure of the companies listed on the Hanoi Stock Exchange are mostly consistent with the hypothesis of trade-off theory rather than pecking-order theory. Our results support the trade-off theory because large firms are more likely to borrow to greater benefits from the tax shield. The study greatly contributes towards the enrichment of empirical evidence on the factors influencing capital structure and helps the management with planning, making properly informed decisions to improve the firm performance.

A Study of Determinants of Capital Structure through Panel Data Analysis of Firms Listed in NSE CNX 500

2016 ◽  
Vol 20 (4) ◽  
pp. 267-277 ◽  
Author(s):  
Barnali Chaklader ◽  
Deepak Chawla
Keyword(s):  
Capital Structure ◽  
Control Variable ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
The Impact ◽  
The Capital Structure

This study contributes to the capital structure literature by investigating the determinants of capital structure of firms listed in NSE CNX 500. The period of the study is 2008–2015, the period starting from the year of global slowdown. This study is an attempt to study the capital structure of firms listed in National Stock Exchange in the post liberalization period. The objectives of the study are to study the impact of independent variables such as growth, profitability, tangibility, liquidity, size and non-debt tax shield on financial leverage and also to find out whether the results are in line with the pecking order theory or the trade-off theory of capital structure. Size is taken as a control variable. Our study supports the trade-off theory for all variables such as growth, profitability, size tangibility and non-debt tax shield. Liquidity is the only independent variable that goes in accordance with the pecking order theory. Thus, this study is more inclined towards the trade-off theory.

scholarly journals DETERMINENTS OF CAPITAL STRUCTURE: EVIDENCE FROM PAKISTAN SUGAR INDUSTRY.

2016 ◽  
Vol 11 (2) ◽  
pp. 2694-2701
Author(s):  
Prof. Dr. Abdul Ghafoor Awan ◽  
Prof. Dr ZahirFaridi ◽  
Abdullahi ShahbazAnwer Ghaz
Keyword(s):  
Capital Structure ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Sugar Industry ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Factors Affecting ◽  
Financial Decision

Capital structure is one of the most complex areas of financial decision making because of its inter-relationship with other financial decision variables. Poor capital structure decisions can result in a high cost of capital which decreases the value of a firm. Effective capital structure decisions decrease the cost of capital and hence the value of a firm increases.  The objective of this empirical study is to analyze the factors affecting capital structure of sugar industry in Pakistan and to check whether the results confirm or not pecking order theory and trade-off theory. Different theories of capital structure have been reviewed like Modigliani and miller theory, trade-off theory, pecking order theory and market timing theory to make assumptions regarding capital structure of sugar firms. The findings are based on empirical results using panel data techniques for a sample of 30 firms listed on Karachi Stock Exchange from 2008-2011. The results show that tangibility is positively associated with leverage whereas size of the firm and liquidity are negatively associated with leverage. The results of profitability and growth opportunities are insignificant.

scholarly journals PENGARUH PROFITABILITAS, SIZE DAN GROWTH TERHADAP STRUKTUR MODAL PADA INDUSTRI BARANG KONSUMSI YANG DIDASARI OLEH PECKING ORDER THEORY DAN TRADE-OFF THEORY

Media Ekonomi ◽  
2016 ◽  
Vol 16 (2) ◽  
pp. 229
Author(s):  
Ika Yustina Rahmawati
Keyword(s):  
Capital Structure ◽  
Consumer Goods ◽  
Stock Exchange ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Industry Sector ◽  
Size Growth ◽  
Consumer Goods Industry

This study aims to determine the effect of profitability, size and growth of the company's capital structure in the consumer goods industry sector based on the pecking order theory and trade-off theory. This research was conducted using the procedure panel data for a sample of 26 consumer goods industry sector companies listed on the Indonesia Stock Exchange during 2009- 2013. The findings of this study is to support H1a, H2b and H3b. based on the results of the analysis of the profitability variable (measured ROE) there is a negative correlation significant at α = 5%, which means supporting the pecking order theory. The size variable (as measured by total assets) and growth (which was measured by the Market to Book Value) positively associated significant at α = 5% and 10%, which means supporting the trade-off theory. For the selection method of FEM and REM, researchers used a test in which the capital REM Test Hausmant be an option for the measurement of capital structure (DER, DAR and Working capital) while FEM selected for the measurement of capital structure (Leverage). Keyword: profitability, size, growth, capital struktur, pecking order theory and trade-off theory

Faktor Determinan Struktur Modal Bank yang Terdaftar di Bursa Efek Indonesia Periode 2015-2019

2021 ◽  
Vol 6 (1) ◽  
pp. 52-62
Author(s):  
Mardianto Mardianto ◽  
Gun Gun Budiarsyah
Keyword(s):  
Stock Exchange ◽  
Order Theory ◽  
Company Size ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Macroeconomic Conditions ◽  
Tax Shield ◽  
Asset Growth ◽  
High Level

This research aims to analyze the effect of profitability, asset structure, liquidity, dividend payout ratio (DPR), non debt tax shield (NDTS), growth, company age, and company size on bank leverage. This study relate the empirical findings and try to confirm with pecking order theory or trade-off theory. The research sample is banks in Indonesia which are listed on the Indonesia Stock Exchange for the period 2015-2019 and using multiple linear regression techniques. An appropriate level of profitability, asset structure as collateral with low value, high level of liquidity show conformity to the pecking order, which are negative and significant to bank leverage. DPR as a signal of income prospects and company size shows conformity with trade-off theory, which is positive and significant to bank leverage. Meanwhile, NDTS which shows a decrease in fixed collateral assets, asset growth and bank age do not have any significant effect with bank leverage. If the findings of age and size are compared, it shows that bank leverage does not depend on how long it has been operating, but assets size are more considered. This research fills in the gaps in the research on the determinants of bank leverage, including examining the variables of DPR, NDTS, and bank age which are rarely studied. In the future, the determinant of leverage may consider the agency theory, potential bankruptcy, corporate governance, ownership structure, and macroeconomic conditions.

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.

scholarly journals Pengujian Trade Off Theory dan Pecking Order Theory di Jakarta Islamic Index

2018 ◽  
Vol 10 (2) ◽  
pp. 90
Author(s):  
Ira Wikartika ◽  
Zumrotul Fitriyah
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Funding Decision ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Funding Sources ◽  
Decision Variables ◽  
Fixed Assets ◽  
Study Population

The operations of the company are always faced with the problem of meeting the needs of funds. Company funding is closely related to the selection and combination of internal funding sources and external funding sources. The funding decision of the capital structure determines the company in carrying out its operating activities that affect the company's value. There are two perspectives in determining the funding decision of capital structure, namely trade-off theory and pecking order theory. This study aims to analyze the effect of capital structure funding decision variables according to the perspective of trade-off theory and pecking order theory on funding decision of capital structure. The study population used companies listed in the Jakarta Islamic Index. The sample used is 30 companies during the period of June to November 2016.  The result shows that according to trade-off theory, firm size and growth influence to leverage, but tangible fixed assets and profitability have no effect on leverage. While according to pecking order theory perspective, it shows that only variable of growth that influence to leverage. Thus it can be concluded that companies in Jakarta Islamic Index tend to follow trade-off theory perspective.

scholarly journals Determinants of Debt Structure in Ace Market Busr Malaysia: A Panel Data Analysis

2018 ◽  
pp. 390-395
Keyword(s):  
Panel Data ◽  
Capital Structure ◽  
Significant Relationship ◽  
Panel Data Analysis ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Tax Shield

This study was conducted with the aim to examine the relevance of different financing theories namely Agency Theory, Trade-Off Theory and Pecking Order Theory to explain capital structure choices among firms in “Access, Certainty, Efficiency” (ACE) Market of Bursa Malaysia. The ACE Market is the financing source for the high-growth and technology requirements of middle-sized firms. The literature on debt policy decision making in the ACE market have been scant, leading the scholars to realize the necessity of performing more studies in this field. To further explain this issue, this study performed a quantitative analysis on a panel data sample of 60 ACE firms from 2005 to 2016. Three proxies for leverage namely total, long-term and short-term debts were examined based on the total assets and equity in six regression models. From seven variables examined in this study, findings indicated a significant relationship between warrant and debt in all models. In addition, liquidity, firm size, profitability and leverage showed significant relationship in all the models except for long-term debt. However, reputation, non-debt tax shield and interest tax shield were seen significant in some models. Trade-off Theory and Pecking Order Theory can jointly clarify determinants of firms’ capital structure in the ACE Market.

scholarly journals The Examination of Trade Off Theory and Pecking Order Theory to Capital Structure on Plantation Companies Listed in Indonesia Stock Exchange

2021 ◽  
Vol 3 (2) ◽  
pp. 323-338
Author(s):  
Jesslyn Wijaya ◽  
Ciptawan Cen
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Order Theory ◽  
Effective Tax Rate ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Tax Rate ◽  
The Capital Structure

Plantation is a promising sector, but just like other firms, this sector will also face the financing problem. Capital structure determines the cost of capital and the risk assumed by the firm. Trade-off and Pecking order theory are the most common theory used to determine the capital structure. The objective of this research is to examine plantation companies tend to use trade-off theory or pecking order theory in determining the capital structure decision. This research used multiple linear regression analysis methods with capital structure as the dependent variable, and the asset structure, firm size, company growth, institutional ownership, effective tax rate, and non-debt tax shield as the independent variables.This is a quantitative research that uses secondary data from financial statements of plantation companies listed in the Indonesia Stock Exchange for 2014 to 2019. The sample was determined by using the purposive sampling technique and 5 out of 21 companies fulfill the sampling requirements. This study conducted observations for 6 years with a total of 30 research samples. The results of this research are both trade-off and pecking order theory are used and still relevant in the capital structure determination. Trade-off theory exerts more influence on capital structure decisions than pecking order theory. This is confirmed by the partial T-test where firm size, institutional ownership, effective tax rate, and non-debt tax shields suggest the use of trade-off theory, only asset structure indicates the tendency of pecking order theory.  

scholarly journals PENGUJIAN TEORI PECKING ORDER ATAS STRUKTUR MODAL (STUDI PADA ENTITAS TERBUKA DI INDONESIA)

2018 ◽  
Vol 13 (01) ◽  
Author(s):  
Winston Pontoh
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Order Theory ◽  
Business Risk ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Public Firms ◽  
Listed Firms ◽  
Fixed Assets

Insufficient working capital for investment activities is a condition which make shareholders and other firm insiders commonly consider to determine additional source of funds. The decision of shareholders and other firm insiders in determining the source of funds for investment activities shall determine the form of firm capital structure. This study uses 236 listed firms in Indonesia Stock Exchange as the sample and take their financial information in period of 2010 to 2015 as data. In term of hypothesis testing, this study conducts path analysis at significance rate of 5%. Result of analysis shows that capital structures for public firms in Indonesia are tend to apply the model of pecking order theory. Empirically, public firms in Indonesia tend to decrease their usage for long term debt in circumstance if they are facing certain business risk. The study also shows that, profitability is not the main factor in determining firm capital structure in Indonesia.Keywords : pecking order, capital structure, business risk, profitability, fixed assets

Pecking Order Theory of Capital Structure: Empirical Evidence for Listed SMEs in India

2021 ◽  
pp. 097226292110572
Author(s):  
Kuldeep Singh ◽  
Deepa Pillai ◽  
Shailesh Rastogi
Keyword(s):  
Capital Structure ◽  
Least Squares ◽  
Capital Markets ◽  
Order Theory ◽  
Ordinary Least Squares ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Tax Shield ◽  
Emerging Capital Markets ◽  
Debt Tax Shield

The purpose of our study is to empirically examine the relevance of pecking order theory (POT) in explaining the capital structure choices made by the listed small and medium enterprises (SMEs) in emerging capital markets. To do so, we use panel data regression on five years of data from 2015 to 2019 of 82 listed SMEs in India. In pursuit of robust results to test the theory, the study uses three econometric models: pooled ordinary least squares (pooled OLS), fixed effects (FE) regression and two-stage least squares (2SLS). Profitability, liquidity, growth, tangibility and non-debt tax shield are the independent variables, size is the controlled variable and financial leverage is the dependent variable. The pooled OLS and FE models provide biased estimates due to the presence of endogeneity. The 2SLS estimates overcome endogeneity in the explanatory variable non-debt tax shield by using tangibility as an instrument. The 2SLS provides a substantial improvement over pooled OLS and FE results. The results indicate that the explanatory variables, namely, profitability, liquidity, non-debt tax shield and size, support the POT. However, the growth and tangibility do not support the POT for listed SMEs. Overall, the results of our study are inclined towards the POT, suggesting that ease of access takes priority in financing decisions by SMEs. Careful consideration of country-specific factors will allow the results to be generalized to other emerging capital markets.

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