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.

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.

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 The Impact of Debt on Capital Structure: Empirical Evidence from Nigeria

2020 ◽  
pp. 7-17
Author(s):  
Gbalam Peter Eze ◽  
Akwarandu Uzochukwu
Keyword(s):  
Capital Structure ◽  
Trade Credit ◽  
Debt Ratio ◽  
Data Set ◽  
Operating Income ◽  
Tax Shield ◽  
Financial Firms ◽  
Debt Tax Shield ◽  
Firm Leverage ◽  
The Impact

This study evaluates the impact of tax shield on capital structure of quoted non-financial firms in Nigeria. Five hypotheses were formulated following the dependent variables of Long Term Debt Ratio and Short Term Debt Ratio. The independent variables employed for this study are: Operating Income, Non-Debt Tax Shield, Debt Tax Shield, Trade Credit Ratio, Firm Size and Firm Leverage. This study is based on ex-post facto research design and made use of panel data set collected from thirty five (35) non-financial companies over a five year period of 2015 and 2019 financial year.  We analyzed the data set using panel least square regression analysis. Our finding supports the trade-off theory developed by Modigliani and Miller’s [1] who explained that, “the relevance of debt with the existence of taxes is beneficial for the formation of a firm’s capital structure and serves to shield earnings from taxes. The result showed that both variables of debt tax shield and firm leverage significantly impact on capital structure of non-financial firms in Nigeria during the period under investigation. The study recommends among others that concerted efforts should be made by financial regulatory bodies to stabilize the tax structure/system in Nigeria. This is based on the fact that reduction of tax frictions not only increases capital buffers for all firms; it also decreases the “Risk Taking” levels of firm managers.

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.

Capital structure decisions in a period of economic intervention

2020 ◽  
Vol 28 (3) ◽  
pp. 465-495 ◽  
Author(s):  
Maria Elisabete Neves ◽  
Zélia Serrasqueiro ◽  
António Dias ◽  
Cristina Hermano
Keyword(s):  
Capital Structure ◽  
Debt Crisis ◽  
Dynamic Panel Data ◽  
Debt Maturity ◽  
Economic Adjustment ◽  
Adjustment Programme ◽  
Content Type ◽  
Two Samples ◽  
The Impact ◽  
The Capital Structure

Purpose This paper aims to analyse the Portuguese companies’ determinants of capital structure. To reach this objective, the authors used data from 37 non-financial Portuguese large enterprises and from 4,233 non-financial small and medium enterprises for the period 2010-2016. Additionally, the authors selected a sub-period from 2010 to 2014 for a deeper understanding of the impact of the sovereign debt crisis and the Economic Adjustment Programme of Troika on the capital structure of those companies. Design/methodology/approach Three dependent variables were tested according to debt maturity, and a dynamic panel data model, namely, the generalised method of moments system estimator, was used to test the formulated research hypotheses following Arellano and Bover (1995) and Blundell and Bond (1998) to capture the dynamic nature of the firm’s capital structure decisions. Findings In general, the results point out that the capital structure decisions depend on a set of firm-specific factors, and that the effects of the determinants of the debt maturity ratios differ according to the type of firm, i.e. large/small firms, and the economic cycle. Originality/value To the best of the authors’ knowledge, this is the first study that has been carried out in Portugal by using two samples of large and small companies for analysing the effects of the Economic Adjustment Programme of Troika on the capital structure of companies. The authors seek to understand which type of companies suffered more because of the effects of the Economic Adjustment Programme of Troika during this period, and which are the capital structure determinants that present greater change. Contrary to what might be expected, large companies are the firms that suffer most from the Economic Adjustment Programme. Probably, because these companies are the most immediate, most scrutinised and those that must show abroad that the bank did not fund them in the long term, because of the imposition and limits to grant credit faced by the banks themselves.

scholarly journals The Determinants of Capital Structure: Empirical Analysis of Oil and Gas Firms during 2000-2015

2017 ◽  
Vol 9 (1) ◽  
pp. 1 ◽  
Author(s):  
Aws Yousef Shambor
Keyword(s):  
Financial Crisis ◽  
Capital Structure ◽  
Oil And Gas ◽  
Global Financial Crisis ◽  
Agency Cost ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
The Global Financial Crisis ◽  
Oil And Gas Firms ◽  
The Capital Structure

This study investigates the capital structure determinants of 346 oil and gas firms that are the constituents of the Global Oil and Gas Index (OILGSWD) over the period of 2000 – 2015, taking into account the effect of the Global Financial Crisis of2007-2009 on the determinants of the capital structure. Thus, six firm level explanatory variables (namely: liquidity, profitability, growth, non-debt tax shield, tangibility and size) are selected and regressed against the appropriate capital structure measure, leverage, the ratio of total debt to book value of total assets. The data is collected from secondary sources depending on the data from the DataStream database. The major findings of the study indicate that tangibility, profitability, size, liquidity and non-debt tax shield are the significant determinants of capital structure of oil and gas firms, while growth is considered insignificant. The capital structure is analyzed in terms of the three main theories of capital structure: Trade-off theory, Pecking order theory, and Agency cost theory. Finally, the global financial crisis has to some extent a significant impact on the capital structure determinants of oil and gas firms and has no significant impact on liquidity, as indicated by the OLS regression analysis results.

scholarly journals Capital structure practices of the selected pharmaceutical companies in india.

2012 ◽  
Vol 1 (3) ◽  
pp. 220-225
Author(s):  
MOHANRAJ V ◽  
DEEPA N
Keyword(s):  
Capital Structure ◽  
Econometric Analysis ◽  
Pharmaceutical Companies ◽  
Tax Shield ◽  
Pharmaceutical Firms ◽  
Equity Ratio ◽  
Debt Tax Shield ◽  
The Capital Structure

The objective of this paper is to examine the capital structure practices of the selected pharmaceutical companies in India during 1991-92 to 2009-10. The econometric analysis shows that variables like Profitability, Size, Tangibility, Growth, Risk and Non-debt tax shield are the important determinants of capital structure of the selected pharmaceutical companies in India. The results indicate that most of the determinants of capital structure suggested by capital structure theories appear to be relevant for pharmaceutical firms. In this paper, Debt Equity Ratio has been used as the proxy for capital structure.

scholarly journals BALANCE SHEET EFFECT SEBAGAI PENENTU DETERMINAN STRUKTUR MODAL ENAM BURSA EFEK PADA NEGARA-NEGARA ASEAN

2012 ◽  
Vol 12 (3) ◽  
pp. 103
Author(s):  
Zainal Abidin Sahabuddin ◽  
Stevanus Adree Cipto Setiawan
Keyword(s):  
Capital Structure ◽  
Firm Growth ◽  
Balance Sheet ◽  
The Philippines ◽  
The State ◽  
External Factors ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
Internal And External Factors ◽  
The Capital Structure

<span>Balance sheet effect is due to the relationship between the external and internal<br /><span>factors. The purpose of this study is to obtain the result: firm size, firm growth, financial <span>risk, asset structure, non debt tax shield on capital structure; influence of internal <span>factors, the influence of internal and external factors of the company’s capital structure. <span>The research was conducted in countries of ASEAN<span>6<span>, namely Indonesia, Malaysia, <span>Philippines, Singapore, Thailand and Vietnam. Unit of analysis of this study is that corporations have huge capitalization in 2008 until 2011. Data analysis using regression method Simultaneous and panels. The results showed: the size of the company has a<br />positive and significant impact on the capital structure for ASEAN6 countries; growth has a negative and significant impact on the capital structure in the country of Malaysia, the Philippines, and Thailand; financial risk has a negative and significant impact on the capital structure in Singapore , asset structure has a positive and significant impact on the capital structure for Singapore, Malaysia, and the Philippines; non-debt tax shield and a significant negative effect on the capital structure for the State of Indonesia<br />and Malaysia, the interest rate has no significant effect on the capital structure in cASEAN 6 countries; foreign exchange rate has a positive and significant effect for the Philippines; rate of inflation on capital structure has a negative and significant impact to the state of Indonesia, the Philippines, and Vietnam while Malaysia, Thailand and Singapore have a positive and significant impact; economic growth on the capital structure has a negative and significant impact to the state of Indonesia, the Philippines, and Vietnam while Negara Malaysia, Thailand and Singapore have a positive and significant impact; contained internal influence on the capital structure for six ASEAN countries; There are internal and external influences on capital structure for ASEAN6<br />countries.<br />Keywords: Balance Sheet Effect, Internal and external factors, and capital structure.<br /></span></span></span></span></span></span></span></span>

scholarly journals Pengaruh Non-Debt Tax Shield Dan Cost Of Financial Distress Terhadap Struktur Modal Pada Perusahaan Sub Sektor Logam Dan Sejenisnya Yang Terdaftar Di Bursa Efek Indonesia (BEI) Tahun 2013-2017

2020 ◽  
Vol 1 (1) ◽  
pp. 55-73
Author(s):  
Muhammad Yusuf ◽  
Andika Kurniawan
Keyword(s):  
Capital Structure ◽  
Financial Distress ◽  
Stock Exchange ◽  
Secondary Data ◽  
Correlation Study ◽  
Positive Influence ◽  
Variable Cost ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
The Capital Structure

This research aims to provide the influence of non-debt variable tax shield and cost of financial distress affect the capital structure of the company's sub-sector metals and the like listed on the Indonesia Stock Exchange in 2013-2017. The method on this research is a quantitative approach with the type of correlation study. The data collection techniques in this study use secondary data with saturated sampling techniques. The population of this research is a metal sub-sector company and the like listed on the Indonesia Stock Exchange (IDX). The samples in this study were as many as 16 metal sub-sector companies and the like listed on the Indonesia Stock Exchange (IDX). The results showed that both the partial and simultaneous variables of the non-debt tax shield and cost of financial distress had no effect on the capital structure of the metal sub-sector companies and the like listed on the Indonesia Stock Exchange ( IDX). It shows that the T-Test in a non-debt tax shield variable is obtained by the T-calculate result of 1.401 and the value of Sig. T. Acquired by 0, 165 > 0.05, then Ho accepted and H1 rejected which means there is no positive influence on the capital structure and in variable cost of financial distress obtained with the result of T-Calculate of 1.756 and the value of Sig. T. Acquired by 0, 083 > 0.05, then Ho is accepted and H1 is rejected which means there is no positive influence on the capital structure. Then simultaneously F test result in can with a fcalculate value of 2.295 with a level of Sig. 0, 108, because of the value of Sig. F > 0.05, then Ho accepted and H1 rejected. This means that there is no variable influence of non debt tax shield (X1) and cost of financial distress (X2) to the capital structure (Y).

scholarly journals The Capital Structure and It’s Impact on the Profitability of the FMCG Companies in India – A Study

2021 ◽  
Vol 04 (10) ◽  
Author(s):  
Dr. Amalesh Patra ◽  
Keyword(s):  
Capital Structure ◽  
Negative Impact ◽  
Positive Impact ◽  
Stock Exchange ◽  
Book Value ◽  
Coverage Ratio ◽  
Total Debt ◽  
Lm Test ◽  
The Impact ◽  
The Capital Structure

The purpose of this study is to examine the impact of the capital structure on the profitability of the companies under the FMCG sector listed in the National Stock Exchange (NSE) of India. The sample of 10 companies over 14 years from 2007 to 2020 is considered in this study. To examine the impact of capital structure on the profitability, Total Debt to Total Assets (TDTA) Debt- Equity (DE), Interest Coverage Ratio (ICR) consider as the independent variables, Price to Book Value Ratio (PBVR) and Growth (GROW) considered as the control variables and Return on Capital Employed (ROCE) considered as dependent variable (profitability). To fulfil the objective of the study Pearsons' Correlation has been conducted for testing the Collinearity, Shapiro- Wilk test has been run for normality test of the variables, to test the Stationary Hadri LM test, Kao and Pedroni test for cointegration test and to choose the appropriate model Hausman test and finally, for the result, I run Fixed Effect Model. The result of the Regression analysis showed that Total Debt to Total Assets (TDTA), Debt- Equity (DE), Interest Coverage Ratio (ICR), and Price to Book Value are the factors that have an impact on the Profitability (ROCE) of the company. The empirical result also suggests that total debt to Total Assets (TDTA), Interest Coverage Ratio (ICR), and Price to Book Value of the company have a positive impact but Debt -Equity has a negative impact on the ROCE

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