scholarly journals Environmental, Social, and Governance Disclosure, Ownership Structure and Cost of Capital: Evidence from the UAE

2020 ◽  
Vol 12 (18) ◽  
pp. 7706 ◽  
Author(s):  
Nejla Ould Daoud Ellili
Keyword(s):  
Capital Structure ◽  
Ownership Structure ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Empirical Studies ◽  
Financial Decisions ◽  
Corporate Governance Mechanisms ◽  
Financial Disclosures ◽  
The Cost ◽  
The Capital Structure

The capital structure decision is one of the most vital financial decisions of the corporation that consists of determining the optimal combination of equity and debt for the companies that would reduce the cost of capital. The examination of the capital structure has always gained importance especially in the theoretical and empirical studies while there is no study of the relationship between the environmental, social, and governance (ESG), the ownership structure, and the cost of capital. In this context, this paper aims to examine the potential impacts of the ESG disclosure and ownership structure on the cost of capital by using a sample of 30 companies listed on the UAE financial markets (Abu Dhabi Stock Exchange and Dubai Financial Market) during the period 2010–2019. The data show that there is an increasing trend in the different non-financial corporate disclosures. The empirical results of various models show that the ESG disclosure, the insider and the institutional ownerships have negative and significant impacts on the cost of capital. Furthermore, the environmental and the governance disclosures reduce the cost of capital. This paper demonstrates the strong role played by the ESG disclosure and the ownership structure in reducing the cost of capital for the companies. These results would encourage the companies in implementing the best practices of the non-financial disclosures and regulating their corporate governance mechanisms.

scholarly journals PENGARUH DETERMINAN STRUKTUR MODAL TERHADAP NILAI PERUSAHAAN (Studi Kasus Pada Perusahaan Properti Di Bursa Efek Indonesia)

2014 ◽  
Vol 2 (2) ◽  
Author(s):  
Murtianingsih .
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Cost Of Capital ◽  
Size Structure ◽  
Stock Exchange ◽  
Business Risk ◽  
Growth Opportunity ◽  
Property Companies ◽  
Equity Ratio ◽  
The Cost

MurtianingsihProgram Pascasarjana Magister Manajemen UMME-mail:[email protected] research was to know the effect of profitability, firm size, liquidity, structure asset, businessrisk, and cost of capital to capital structure at property simultaneously listed on IndonesiaStock Exchange and to know the variable which have partial effect to the capital structure.The research was taken place at Indonesia Stock Exchange Economics Faculty ofMuhammadiyah University Malang. Respondent are 21 property companies listed in IndonesiaStock Exchange. Purposive sampling was used to determine companies during five-years.Secondary data was taken between the year of 2006 up to 2010. Multiple regression analysisused to know the effect of profitability, firm size, liquidity, structure asset, business risk, andcost of capital to capital structure with 5 % of significance. The result of simultaneously regression(F test) exemplify that the variable profitability, firm size, structure asset, growthopportunity, liquidity, the cost of capital, business risk had significant effects to the capitalstructure of 21 property companies listed in Indonesia Stock Exchange. While the test of partialregression (t test), for the variable of profitability, growth opportunity, liquidity, cost ofcapital had effects to capital structure of property companies listed in Indonesia Stock Exchange,except the firm size, business risk, structure asset have no significant effects to thecapital structure of the property companies.Keyword: Debt to equity ratio, company size, profitability, growth, business risk and asset structure,cost of capital, liquidity

scholarly journals PENGARUH UKURAN PERUSAHAAN, RESIKO BISNIS DAN PERTUMBUHAN AKTIVA TERHADAP STRUKTUR MODAL PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BEI TAHUN 2005-2007

2017 ◽  
pp. 52-63
Author(s):  
Joana L. Saragih
Keyword(s):  
Capital Structure ◽  
Ownership Structure ◽  
Random Sampling ◽  
Stock Exchange ◽  
Manufacturing Sector ◽  
Manufacturing Companies ◽  
Business Risk ◽  
Simultaneous Test ◽  
Independent Variable ◽  
The Capital Structure

A decision on a capital structure (ratio between share and loan capitals) done by a financial manager is an important decision. This is due to its influence upon risks undergone and profits expected by shareholders. These analyses are used to solve the problem which is whether the size of the firm, the business risks, the growth of assets, the profitability and the ownership structure influence the capital strusture or not? The population in this research is the go public manufacturing sector in the Indonesia Stock Exchange for years 2005 until 2007. The sample is defined by cluster propotional random sampling to get a representative sample on each sector. There are 33 go public manufacturing companies selected as sample for this research. There are two variables in this research, the independent variable and dependent variable. The independent variable comprises firm size, business risk, growth of assets, and profitability; and for the dependent variable is the capital structure of go public manufacturing companies in the BEI. This research was analyzed using multiple regressions. This research found the empirical results that partially, SIZE influences positive significant and NPM influences negative significant to the capital structure of go public manufacturing companies in the Bursa Efek Indonesia. While the result of partial test for DOL and GROW showed that partially they didn’t influence significantly to the capital structure. The result for the simultaneous test showed that there is influence between SIZE, DOL, GROW, and NPM with the capital strusture of go public manufacturing companies in the Bursa Efek Indonesia. The influence is 0,197 or 19,7%. The other 80.3% influenced by another factors outside the research or the regression model.

Are Banks Special?

2018 ◽  
Vol 08 (04) ◽  
pp. 1840004 ◽  
Author(s):  
Michel Crouhy ◽  
Dan Galai
Keyword(s):  
Capital Structure ◽  
Cost Of Capital ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Market Conditions ◽  
The Cost ◽  
The Capital Structure

This paper addresses the following question: Are banks special firms that can achieve their goals only with high leverage, above and beyond what is considered acceptable for industrial corporations? This question is related to the issue of the cost of capital and how it is affected by leverage. If we accept the Modigliani–Miller (M&M) theorem (1958), then the capital structure is irrelevant for both the cost of capital and the value of the bank. Specifically, the M&M hypothesis argues that higher levels of equity capital reduce bank leverage and risk, leading to an offsetting decline in banks’ cost of equity capital. Hence, we ask the question whether banks are special firms such that M&M theorem does not apply to banks. We show that M&M propositions cannot be applied for banks primarily because of explicit guarantees and subsidies that provide incentives for increasing leverage. Then, some of the risk faced by the bank is transferred at no cost to the providers of these guarantees and subsidies, giving banks the incentive to increase leverage as much as they can. We show that under perfect market conditions, when risk is fairly priced, this opportunity vanishes.

scholarly journals Leverage and the Cost of Capital: Some Tests Using Nepalese Data

2007 ◽  
Vol 3 (1) ◽  
pp. 85-91 ◽  
Author(s):  
Hari Bahadur Khadka
Keyword(s):  
Capital Structure ◽  
Capital Markets ◽  
Cost Of Capital ◽  
Traditional Approach ◽  
Cost Of Equity ◽  
Business Studies ◽  
Interest Charge ◽  
The Cost ◽  
The Relationship ◽  
The Capital Structure

This paper is devoted to test the MM’s propositions about the relationship between leverage and cost of capital in the context of Nepalese capital markets. The main objective of the study is to determine whether the firms' overall cost of capital and cost of equity decline with the increasing use of leverage. The results showed a negative but insignificant beta value of the relationship between leverage and the overall cost of capital. Therefore the leverage may not be regarded as contributing variable to the cost of capital function for Nepalese firms. But finding contradicts with the traditional approach of the capital structure theories. It is further concluded that the cost of capital declines not only with leverage because of the tax deductibility feature of interest charge. The relationship between the cost of equity and leverage is also strongly negative. Besides leverage, the size, and D-P Ratio are other important variables that affect the cost of capital in Nepalese context.Journal of Nepalese Business Studies 2006/III/1 pp. 85-91

scholarly journals DETERMINAN STRUKTUR MODAL DAN NILAI PERUSAHAAN PERTAMBANGAN PASCA UU NOMOR 4 TAHUN 2009

2017 ◽  
Vol 19 (1) ◽  
pp. 23
Author(s):  
Sumani Sumani
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Empirical Studies ◽  
Institutional Ownership ◽  
Negative Influence ◽  
Managerial Ownership ◽  
Company Size ◽  
Mining Companies ◽  
Size Growth ◽  
The Capital Structure

The aim of research is to know the effect of profitability, company size, growth, business risks, managerial ownership and institutional ownership on the capital structure as well as the influence of capital structure to value mining companies after the implementation of Law No. 4 of 2009 on Mineral and coal's Mining. The research carried out to test the hypothesis based on theoretical and empirical studies. The study population is a mining company listed on the Indonesia Stock Exchange, with a population of 36 company members. The sampling method was using purposive sampling techniques and acquired 11 companies in the study period of six years, from 2009 to 2014. Multiple and simple regression analysis techniques were used according to the research objectives to be achieved. Regression models of this study were not violation classic assumption which includes multicollinearity, autocorrelation and heteroscedasticity. Hypothesis testing results showed the variables of profitability, business risk, managerial ownership and institutional ownership have negative effect on the mining company's capital structure.  However, company size, growth and asset structure not significant on the capital structure. On the other side, Capital structure significantly negative influence to the value of mining companies after the implementation of Law No. 4 of 2009.

scholarly journals Determinants of Capital Structure in Industrial Companies: Conservative Policy—Applied Study on Jordanian Industrial for the Period (2014-2016)

2019 ◽  
Vol 14 (2) ◽  
pp. 125 ◽  
Author(s):  
Abeer Al Abbadi
Keyword(s):  
Capital Structure ◽  
Interest Rates ◽  
Credit Rating ◽  
Stock Exchange ◽  
Industrial Companies ◽  
Tangible Assets ◽  
Conservative Policy ◽  
The Cost ◽  
The Impact ◽  
The Capital Structure

The study aimed to define the factors that determinate the capital structure for industrial companies in Jordan. By depending on theoretical references and literature review that related to capital structure, and to define the determinants that influenced the capital structure by depending on statistical analysis. The study used 15 companies of Amman stock exchange for the period 2014-2016. The study concluded multiple results. The most importantly, there is significant impact of profitability, interest rates, and the amount of tangible assets. And there is impact of investment opportunities, the size of company and to the adoption of conservative policy according to the comprehensive concept of indebtedness in building capital structure. There was no possible impact for financial distress. The study proposed recommendations. The most important recommendations are studying the underlying causes of reduction long term debt ratio to the total assets of many public share holding companies. Urging financial managers to study the capital structure and the factors that determinate it, in order to manage the capital structure of the companies according to scientific methodology. Urging companies to use Islamic instruments for funding the tangible assets .As it is appropriate to the prevailing economic conditions in the market in terms of profit rates. It is necessary to confirm the existence of a credit rating classification from international credit agencies that helps in issuance of instruments and corporate bonds, or to obtain credit. Urging companies using rent ending in ownership or finance leasing; and urging companies of tangible assets to obtain funding from Islamic and commercial banks especially, when the cost of borrowing and Islamic funding is less than the cost of the issuance of shares. The study suggested studying the determinate factors that makes some companies following the conservative policy in building the capital structure, and in maintaining high cash balances. The study affected the impact of the existence of financial organizations as board of directors in public shareholding companies determine and study the factors of building the capital structure.

scholarly journals CAPITAL STRUCTURE ANALYSIS TO OPTIMIZE THE PROFITABILITY OF MSMES (CASE STUDY ON MSMES HIKMAH IN SIDOARJO, EAST JAVA, INDONESIA)

2019 ◽  
Vol 1 (2) ◽  
pp. 241-250
Author(s):  
Danur Ramadhani ◽  
Agus Sukoco ◽  
Joko Suyono
Keyword(s):  
Capital Structure ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Financial Statements ◽  
Business Owners ◽  
Optimal Capital Structure ◽  
Descriptive Research ◽  
The Cost ◽  
The Capital Structure

This study aims to analyze the capital structure used to optimize profitability in MSME embroidery shoes. This study uses descriptive research with a qualitative approach. The analytical method is used Weighted Average Cost Of Capital (WACC). The techniques of data collection in this research used interview, observation, documentation and triangulation methods. The data that used are financial transaction records and financial statements issued by the company itself. The results showed that UD. Hikmah used the composition of the capital structure consisting of debt of 20%, 80% own capital with a ROE rate of 170%. Optimization results obtained the optimal capital structure composition on the composition of debt 23% and own capital 77%. By generating a level of profitability that can provide a favorable return for business owners, with the highest calculation of ROE that is equal to 173% and the cost of capital to be borne is Rp.18.238.000 every year.

scholarly journals Cost of Capital Estimation for Highway Concessionaires in Chile

2018 ◽  
Vol 2018 ◽  
pp. 1-9 ◽  
Author(s):  
Cristian Vergara-Novoa ◽  
Juan Pedro Sepúlveda-Rojas ◽  
Miguel D. Alfaro ◽  
Nicolás Riveros
Keyword(s):  
Capital Structure ◽  
Stock Prices ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Cost Of Debt ◽  
Capital Asset Pricing ◽  
Cost Of Equity ◽  
Asset Pricing Model ◽  
The Cost ◽  
The Capital Structure

In this paper, we present the cost of capital estimation for highway concessionaires in Chile. We estimated the cost of equity and the cost of debt and determined the capital structure for each one of twenty-four concessionaires that operate highways. We based our estimations on the developments of Sharpe (1964), Modigliani and Miller (1958), and Maquieira (2009), which were also compared with the Brusov et al. (2015) developments. We collected stock prices for different highway concessionaires around the world from Google Finance and Reuters’ websites in order to determine the Beta of equity using a representative company. After that, we estimated the cost of equity considering Hamada (1969) and a Capital Asset Pricing Model. Then, we estimated the cost of capital using the cost of debt and the capital structure of Chile’s highway concessionaires. With all above, we were able to determine the Weighted Average Cost of Capital (WACC) for highway concessions which ranges from 5.49 to 6.62%.

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