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 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 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 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. 

scholarly journals Testing the pecking order theory of capital structure: the case of Islamic financing modes

2020 ◽  
Vol 6 (1) ◽  
Author(s):  
Moncef Guizani
Keyword(s):  
Capital Structure ◽  
Random Effect ◽  
Order Theory ◽  
Equity Financing ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Financing ◽  
Financing Decisions ◽  
Executive Managers ◽  
The Capital Structure

AbstractThe purpose of this paper is to examine whether or not the basic premises according to the pecking order theory provide an explanation for the capital structure mix of firms operating under Islamic principles. Pooled OLS and random effect regressions were performed to test the pecking order theory applying data from a sample of 66 Islamic firms listed on Kingdom of Saudi Arabia stock market over the period 2006–2016. The results show that sale-based instruments (Murabahah, Ijara) track the financial deficit quite closely followed by equity financing and as the last alternative to finance deficit, Islamic firms issue Sukuk. In the crisis period, these firms seem more reliant on equity, then on sale-based instrument and on Sukuk as last option. The study findings also indicate that the cumulative financing deficit does not wipe out the effects of conventional variables, although it is empirically significant. This provides no support for the pecking order theory attempted by Saudi Islamic firms. This research highlights the capital structure choice of firms operating under Islamic principles. It explores the implication of the relevant Islamic principles on corporate financing preferences. It can serve firm executive managers in their financing decisions to add value to the companies.

scholarly journals Determinants of the Capital Structure of Companies Listed on the Stock Exchanges of Argentina, Brazil and Chile: An Empirical Analysis of the Period from 2007 to 2016

2020 ◽  
Vol 12 (6) ◽  
pp. 18
Author(s):  
Marcelo Rabelo Henrique ◽  
Sandro Braz Silva ◽  
Antônio Saporito ◽  
Sérgio Roberto da Silva
Keyword(s):  
Panel Data ◽  
Capital Structure ◽  
Order Theory ◽  
Future Research ◽  
Stock Exchanges ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Speed Of Adjustment ◽  
Asset Growth ◽  
The Capital Structure

The present investigation refers to the determinants of the capital structure, using the technique of multiple regression through Panel Data of open capital companies in the stock exchanges of Argentina, Brazil and Chile, in order to know the behavior of determinants of the capital structure in relation to Trade-Off Theory (TOT) and Pecking Order Theory (POT). The POT offers the existence of a hierarchy in the use of sources of resources, while the TOT considers the existence of a target capital structure that would be pursued by the company. Sixteen accounting variables were used, in which five are dependent (related to indebtedness) and eleven are independent variables (explaining the determinants of the capital structure). It is observed that, with the use of the Panel Data, the determinants that seem to influence in a more accentuated way the levels of debt of the companies are: current liquidity, tangibility, return to shareholders, return of assets, sales growth, asset growth, market-to-book and business risk measured by the volatility of benefits. Suggestions for future research include the use of Panel Data to analyze other factors that may influence indebtedness, mainly taxes and dividends, as well as a deeper analysis of factors that may influence the speed of adjustment towards the supposed objective level.

scholarly journals Determinants of Capital Structure in the Construction Companies across Europe and Central Asia Region

2020 ◽  
Author(s):  
Hakan Bal
Keyword(s):  
Capital Structure ◽  
Central Asia ◽  
Fixed Ratio ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Dummy Variables ◽  
Construction Companies ◽  
Negative Effect ◽  
Central Asia Region

This study examines the effects of asset tangibility, profitability, size and liquidity on capital structure (debt leverage) across the construction companies operating in in Europe and Central Asia region using the data between 1993 and 2019. The study documents that the capital structure and other financial ratios under study differ across countries, even in the same industry. Book leverage is found to be significantly negatively related to asset tangibility, profitability and liquidity in accordance with pecking order theory. In particular, fixed ratio has a negative effect on debt ratio in Russia and Romania, but no effect in other countries under study. The effect of size disappears when time dummy variables are introduced.

scholarly journals New evidences on determinants of capital structure from the Indian manufacturing industry

2016 ◽  
Vol 13 (3) ◽  
pp. 82-88 ◽  
Author(s):  
Pradeepta Sethi ◽  
Ranjit Tiwari
Keyword(s):  
Capital Structure ◽  
Manufacturing Industry ◽  
Order Theory ◽  
Manufacturing Firms ◽  
Indian Government ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Optimal Capital Structure ◽  
Financing Decisions ◽  
Size Growth

In the backdrop of Make in India push by Indian government the purpose of this study is to examine the determinants of capital structure towards a better understanding of financing decisions to be undertaken by the Indian manufacturing firms. The data for the analysis is drawn from COSPI manufacturing index of Centre for Monitoring Indian Economy (CMIE). Our sample is an unbalanced panel of 1077 firms over the period 2000-01 to 2012-13. We apply system-GMM to study different factors that affect the leverage decision of firms in India. The findings of the study reveals that the choice of optimal capital structure can be influenced by factors such as profitability, size, growth, tangibility, non-debt tax shields, uniqueness and signal. We also find the existence of both pecking order theory and static trade-off theory in the case of Indian manufacturing firms. The results thus obtained are robust across the different proxies of leverage

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