scholarly journals THE EFFECT OF INVESTMENT OPPORTUNITY SET ON CORPORATE CAPITAL STURUCTURE

2015 ◽  
Vol 6 (2) ◽  
pp. 119-134
Author(s):  
Moh Rusman Ramli ◽  
Frans Papi Papilaya
Keyword(s):  
Capital Structure ◽  
Secondary Data ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Capital ◽  
Investment Opportunity Set ◽  
Corporate Capital Structure ◽  
Independent Variable ◽  
The Relationship

ABSTRACTInvestment opportunity is the heart of the company's growth is that become important expectation which desired by the internal and external parties of company  such as management, investors and creditors. The purpose of this study was to analyze the significance of the effect of IOS on the capital structure of the company. Object of this study is automotive and component companies and the research span was 2008-2012. The dependent variable of this study is the firm's capital structure, while the independent variable is IOS which consists of 5 single’s proxy. The data used are secondary data from ICMD 2008-2012. The analytical tool used is a simple regression and factor analysis. The results showed that IOS significantly positive effect on capital structure. There are three viable IOS proxy used to form the joint proxy variables IOS that is E / P , MV / BVA and MV / BE. This study confirms that the proxy IOS with combined proxy better than a single proxy . This study also supports the pecking order theory than trade off theory regarding the relationship between IOS corporate capital structure.

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 Sectoral Analysis of the Determinants of Corporate Capital Structure in Malaysia

2019 ◽  
Vol 10 (2) ◽  
pp. 278-293
Author(s):  
Yee Peng Chow
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Ordinary Least Squares ◽  
Seemingly Unrelated Regression ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Capital ◽  
Unrelated Regression ◽  
Corporate Capital Structure ◽  
Two Sectors

This study investigates the determinants of corporate capital structure of various sectors in the Bursa Malaysia Main Market with the aim to establish whether the determinants of capital structure can be explained by either the trade-off or the pecking order theory. This study also examines whether there are any differences between the regressions for any two sectors or not. This study applies both the ordinary least squares (OLS) and the seemingly unrelated regression (SUR) estimators to estimate the leverage models, and subsequently determines the efficiency of each estimator. The results indicate that profitability, asset tangibility, growth opportunities, and firm size are important determinants of corporate capital structure. However, the signs of the regression coefficients suggest that the trade-o and pecking order theories are complementary. Moreover, the importance of some of these determinants differs across sectors. In most cases of the regression analyses between two sectors, the SUR estimator is found to be more efficient in explaining the determinants of capital structure among the various sectors. Hence, this study concludes that the SUR method could serve as a useful alternative methodology for capital structure research.

scholarly journals Pecking order, earnings management and capital structure

Accounting ◽  
2021 ◽  
Vol 7 (6) ◽  
pp. 1389-1394 ◽  
Author(s):  
Novi Swandari Budiarso ◽  
Winston Pontoh
Keyword(s):  
Capital Structure ◽  
Earnings Management ◽  
Stock Exchange ◽  
Agency Problem ◽  
Agency Problems ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Capital Structure ◽  
Debt Capacity

Most of studies imply that firms decrease or increase their debt capacity in context of pecking order theory or agency problems. On this point, the setting of this study is based on two main problems related to capital structure: the first is determining the source of funds for financing investments, and the second is solving the conflict between shareholders and managers, or the agency problem. The objective of this study is to provide evidence about how firms establish their capital structure in relation to pecking order theory and the agency problem by controlling earnings management in the context of Indonesian firms. This study conducts logistic regression on 28 firms in the consumer goods industry listed on the Indonesia Stock Exchange from 2010 to 2017.This study finds that pecking order theory determines the capital structure of most Indonesian firms with high debt. The results imply that agency problems are unable to explain corporate capital structure and earnings management is not effective for motivating Indonesian firms to establish corporate governance.

scholarly journals PENGARUH STRUKTUR KEPEMILIKAN TERHADAP NILAI PERUSAHAAN DENGAN EFISIENSI STRUKTUR MODAL SEBAGAI VARIABEL MEDIASI

AJAR ◽  
2021 ◽  
Vol 4 (02) ◽  
pp. 87-109
Author(s):  
Felicia Wuisan ◽  
Excel Limbunan ◽  
Oktavianus Pasoloran ◽  
Cherly Thanamal
Keyword(s):  
Capital Structure ◽  
Ownership Structure ◽  
Firm Value ◽  
Stock Exchange ◽  
Secondary Data ◽  
Order Theory ◽  
Annual Reports ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Research Period

This study aims to examine the influence of ownership structure on firm value mediated by efficiency capital structure. This research uses pecking order theory, agency theory, and stakeholder theory. The population used in this study are all companies listed on the Indonesia Stock Exchange (IDX) with the research period of 2016-2018. The method of determining the sample using non-random sampling i.e purposive sampling and uses secondary data in the form of annual reports and financial statements of the company. The analytical method used are path analysis and sobel test. The results showed that the efficiency of capital structure can fully mediate the effect of ownership structure on firm value.

scholarly journals Capital structure and the firm’s life stage

2005 ◽  
Vol 36 (4) ◽  
pp. 9-18 ◽  
Author(s):  
A. Frielinghaus ◽  
B. Mostert ◽  
C. Firer
Keyword(s):  
Pilot Study ◽  
Capital Structure ◽  
Life Stage ◽  
Order Theory ◽  
Life Stages ◽  
Stage Model ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
The Relationship ◽  
Over Time

In this paper we argue the case for a relationship between capital structure and a firm’s life stage. We provide an overview of the two sets of theories and follow this with a proposed linkage between the life stage and capital structure. We use the Adizes life stage model to assess the life stage of the firms in our sample. Our pilot study found a statistically significant relationship between life stage and the capital structure of respondents. The nature of the relationship (more debt in the early and late life stages than in prime) supports the pecking order theory of capital structure and suggests a practical use of the life stage model in helping firms to understand how their financing is likely to change over time.

scholarly journals CAPITAL STRUCTURE AND CULTURE IN MALAYSIA: A STUDY FROM ETHNICITY AND RELIGION PERSPECTIVES

2020 ◽  
Vol 8 ◽  
pp. 52-61
Author(s):  
Shu Geok Ooi ◽  
Ei Yet Chu
Keyword(s):  
Capital Structure ◽  
Institutional Economics ◽  
Secondary Data ◽  
Order Theory ◽  
New Institutional Economics ◽  
Minority Shareholders ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Financial Decision ◽  
Data Collection Approach

Conceptualization from New Institutional Economics of Williamson (2000), the study looked at the issue of formal and informal institutional factors on financial decision making. This study first investigated the informal embedded culture such as “ethnicity and religion” that could influence the decision in a firm's capital structure. Secondly, the influence of culture informal institutions such as “Shariah and Non-Shariah compliant firms on capital structure decisions was investigated. Previous observations showed Chinese have high individualism and low uncertainty avoidance. Whereas, the Malay has low individualism and high uncertainty. These dimensions affect firm’s decision behaviour towards capital structure decision. This study aimed to confirm whether culture could explain trade-off and pecking order theory of capital structure decision. The study adopted a New Institutional Economics framework to understand how cultural divergence rationality interferes on caporal structure decision, where traditional finance only emphasises on economic responsibility that strives resources maximization. The study applied a longitudinal approach, where 187 sample firms of data covering a sample period from 2015 to 2019. The firms consisted of Bursa 90 best corporate governance firms awarded by Minority Shareholders Watch Group (MSWG) in 2017 and 2018; also randomly selected 97 PLCs of non-winner firms where both panels data balance in term of Board independence and Number of Shariah Compliance PLCs. A secondary data collection approach was adopted to obtain the CEO’s ethnicity and religion. Data from the extract of an annual report and Shariah-compliant list were adopted. This study made significant contributions to explain the relationships of informal (culture as ethnicity and religion) on capital structure; formal institution (policies as firm’s shariah compliance) on capital structure decision.

scholarly journals The Relationship between Capital Structure and Financial Performance of the Company

2021 ◽  
Vol 91 ◽  
pp. 01002
Author(s):  
V.V. Tretiakova ◽  
M.S. Shalneva ◽  
A.S. Lvov
Keyword(s):  
Pharmaceutical Industry ◽  
Capital Structure ◽  
Financial Performance ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Market Capitalization ◽  
Negative Effect ◽  
The Impact ◽  
The Relationship

The article examines and analyzes the relationship of key performance indicators (ROA, ROIC, change in market capitalization and price-to-book ratio) and the capital structure of the company based on the pharmaceutical industry in the UK for the 2009-2019 period. The study seeks to provide a practical evidence on the impact of external financing on company’s financial performance and test applicability of the pecking order theory for the chosen companies. The research conducted uses panel data regression and Wald test to determine and analyze the effect of capital structure on the financial indicators of the company performance. The study used a sample of 185 UK companies from the pharmaceutical industry. The result of the research showed that equity has negative effect on price-to-book ratio and ROA and positive effect on change in market capitalization, while long-term debt has a positive relationship with price- to-book ratio and change in market capitalization. In addition, short-term debt has a negative effect on change in market capitalization, ROA and ROIC. The study also provides only partly coincidence of the results with the pecking order theory.

scholarly journals The behavior of capital structure: evidence from fast calibrated additive quantile regression

2021 ◽  
Vol 1 (1) ◽  
pp. 57-71
Author(s):  
Umut Uyar
Keyword(s):  
Capital Structure ◽  
Quantile Regression ◽  
Order Theory ◽  
Agency Cost ◽  
Annual Data ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Explanatory Variables ◽  
Optimal Capital Structure ◽  
The Relationship

In finance, capital structure decisions are crucial due to their impact on the value of a firm. Some theories assert that the value of a firm is irrelevant to those decisions. However, there is a growing literature that criticizes this idea. Those studies are constructed on some modern theories which called trade-off theory, agency cost theory, signaling theory, and pecking order theory. This paper investigates the relationship between optimal capital structure and capital structure components. The annual data gathered from 195 firms traded in Borsa Istanbul for the period 2011-2020 is used. The fast calibrated additive quantile regression approach is chosen because of its superior properties. In that method, there is not a strong assumption about the functional form of the relationships between the dependent variable and the explanatory variables. The results indicate that the relationships between the debt ratios and the capital structure components differ for each quantile and these relations are nonlinear. Furthermore, evidence is found that the relationships might be explained with the modern theories of capital structure.

Qualitative Research on Critical Issues In Halal Logistics

2013 ◽  
Vol 1 (2) ◽  
pp. 131 ◽  
Author(s):  
Mohamed Syazwan Ab Talib ◽  
Lim Rubin ◽  
Vincent Khor Zhengyi
Keyword(s):  
Capital Structure ◽  
Agency Theory ◽  
Random Effect ◽  
Random Effect Model ◽  
Order Theory ◽  
Specific Factor ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Financing ◽  
Financing Decision

This is a preliminary study developed to explore the determinants of capital structure of Shariah-compliant firms listed in Bursa Malaysia. This study is primarily motivated by the issue of the determinants still being inconclusive in the area of capital structure. The study is performed using the static models namely Pool Ordinary Least Square, Fixed Effect and Random Effect Model. Empirical analysis on the determinants reveals that country specific factor which is GDP and sector specific factor which is industry concentration are also significant in influencing the corporate financing decisions in this country along with firm specific factors such as efficiency, bankruptcy risk, profitability, tangibility, liquidity and size of the firm. The findings revealed that results are sensitive to models employed in the study. Nevertheless, the applicability of capital structure theories such as the trade-off theory, agency theory and pecking order theory diverge across sectors in Malaysia. The pecking order theory and agency theory are found to be the dominant theories governing the corporate financing decision in the country as well. It indicates strong evidence of hierarchy practised in firms’ financing decision. The finding on agency theory being dominant justifies the function of short-term debt as a controlling mechanism to mitigate the agency problem arises within firms across sectors. 

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