scholarly journals MANUFACTURING FIRMS’ CAPITAL STRUCTURE IN BANGLADESH: COMPARISON BETWEEN LISTED MNCS AND LOCAL COMPANIES

2021 ◽  
Vol 6 (1) ◽  
pp. 1-18
Author(s):  
Syed Mohammad Khaled Rahman ◽  
Tasmina Chowdhury Tania
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Jel Classification ◽  
Financial Leverage ◽  
Short Term ◽  
Long Run ◽  
Local Companies ◽  
Domestic Companies ◽  
The Capital Structure

The capital structure of a firm has immense significance as it has implications on corporate value and financial performance. The basic aim of the research was to analyze and compare the capital structure of Dhaka Stock Exchange (DSE)-listed multi-national companies (MNCs) and local companies of Bangladesh over 24 years (1996-2019). Stratified sampling techniques were applied to the selection of firms. Six financial leverage ratios were used to analyze and compare capital structures. There were significant differences in capital structure between local companies and MNCs as the null hypothesis was rejected. It was also found that the mean equity-financing proportion of domestic companies and MNCs were 65% and 92.5% respectively. The proportion of long term debt in total capital employed was very low for both types of companies. MNCs can raise the proportion of both short and long-term debt to take the advantage of financial leverage. Domestic companies can redeem some short term loan and replace some short term debt with long term debt. This research would be useful for corporate financial managers, creditors, and investors to take appropriate financing as well as investment decisions which would affect shareholders' wealth and value of the firm in the long run to a significant extent. JEL Classification Codes: G30, G32, G39

scholarly journals Influence of Corporate Taxation on the Financial Leverage of Czech, Polish and Russian Companies

2019 ◽  
Vol 13 (3) ◽  
pp. 61-70
Author(s):  
Irena Jindrichovska ◽  
Vyacheslav Moskalchuk
Keyword(s):  
Capital Structure ◽  
Eastern Europe ◽  
Research Area ◽  
Subject Area ◽  
Corporate Taxation ◽  
Financial Leverage ◽  
Short Term ◽  
Coverage Ratio ◽  
The Capital Structure

This article aims to compare and contrast the available empirical evidence concerning the capital structure of Polish,Czech and Russian companies. This is an intriguing research area due to the fact that the Czech and Polish economiesbegan their transition to the market economy contemporaneously with Russia, and so along with other cultural andhistorical parallels, the data is comparable.We compare data from a selection of large companies from the selected territories and investigate whether effective taxrate is significant determinant of capital structure. The selected sample is comprised of 69 companies (50 from Russia, 9from Poland, and 10 from Czech Republic), using data over a period of fourteen years. We perform a regression analysisand interpret the results using theoretical knowledge as articulated in the academic literature. The dependent variablein all tested regressions is financial leverage, calculated as the ratio of the sum of short-term and long-term debts to thesum of short-term and long-term assets. Other variables evaluated include interest coverage ratio, the level of companytangibility, and the cost of debt. This set of input values was uploaded from the Bloomberg database.Our results indicate that taxation does have determining effect on the choice of a certain level of leverage. Moreover,the effective tax rate represents the most important factor in determining the model of capital structure utilised by largecompanies in each country studied. We establish the dependence of capital structure models on the level of corporate taxapplied in each country and identify a set of additional determinants which play a significant role.This paper’s novelty may be summarised as representing an advanced understanding of specific aspects of influence ofthe corporate taxation on the capital structure of companies in Russia and other economies of the former Eastern Bloc.This paper shines a new light on the subject area by extending the duration of the studied data beyond previous research,to fourteen years. As such, in this paper we present a comparitive dynamic which may be mapped on to other similarcomparitive studies. Our results will be of interest in professionals and academics who are involved in the fields oftaxation, debt and equity in Eastern Europe and Russia. The schema utilised here may be applied in a similar manner toexamine the development of similar economies in Eastern Europe and further afield.

scholarly journals Features of the formation and management of the capital structure of state-owned enterprises

2020 ◽  
pp. 40-50
Author(s):  
С.Г. Макарова ◽  
Е.И. Андрианова
Keyword(s):  
Capital Structure ◽  
Financial Stability ◽  
Stock Exchange ◽  
Negative Influence ◽  
State Ownership ◽  
State Participation ◽  
Retained Earnings ◽  
The Capital Structure

Окончание. Начало в №5 за 2020 г. Вопрос о влиянии собственности государства в крупных российских компаниях на их структуру капитала остается открытым и пока не получил окончательного разрешения в литературе. Результаты работ, проведенных для российского рынка, свидетельствуют о значительной роли государственного участия в российских компаниях [5], а также о том, что российские компании с государственным участием имеют значительно более высокие значения долга в структуре капитала, чем частные [34]. В данной публикации для оценки роли государственного участия на структуру капитала российских компаний был проведен эмпирический анализ 139 публичных компаний за 2014-2018 гг. (выборка представлена государственными и частными компаниями), котирующихся на Московской бирже. В рамках проведенного исследования было выявлено, что отечественные публичные государственные компании при прочих равных условиях имеют более высокое значение долга в структуре капитала, чем частные. Кроме этого, компании с государственным участием имеют также более высокие значения коэффициента долгосрочных обязательств в сравнении с частными. Это подтверждает гипотезу о том, что деятельность государственных компаний связана с большими финансовыми рисками, чем частных, особенно в долгосрочной перспективе. В данной ситуации целесообразно ввести политику, направленную на повышение финансовой устойчивости государственных компаний, а именно, осуществлять деятельность по расширению производственных процессов за счет собственных средств и нераспределенной прибыли, а не за счет заемных средств. Также было получено положительное значимое влияние на структуру капитала компаний с государственным участием таких факторов, как размер компании, рентабельность продаж, рентабельность собственного капитала, было выявлено отрицательное влияние таких детерминант, как величина чистых активов, коэффициент оборачиваемости активов, отношение операционных расходов к EBITDA, рентабельность активов. The question of the influence of state ownership in Russian companies on their capital structure remains open for further discussion and the conclusion has not been drawn yet. The results of the work carried out for the Russian market indicate a significant role of state participation in Russian companies [4], as well as the fact that Russian companies with state participation have significantly higher values of debt in the capital structure than private ones [33]. In this publication, to assess the role of state participation in the capital structure of Russian companies, an empirical analysis of 139 public companies for 2014-2018 was carried out. (sample presented by state and private companies) listed on the Moscow Stock Exchange. n this study, it was revealed that domestic public state-owned companies, other things being equal, have a higher value of debt in the capital structure than private ones. In addition, companies with state participation also have higher values of the ratio of long-term liabilities in comparison with private ones. This confirms the hypothesis that the activities of state-owned companies are associated with greater financial risks than private ones, especially in the long term. In this situation, it is reasonable to introduce a policy aimed at increasing the financial stability of state-owned companies, namely, to carry out activities to expand production processes at the expense of their own funds and retained earnings, and not at the expense of borrowed funds. We also obtained a positive significant influence on the capital structure of companies with state participation of such factors as the size of the company, profitability of sales, return on equity, negative influence of such determinants as the value of net assets, the asset turnover ratio, the ratio of operating expenses to EBITDA, return on assets.

scholarly journals The Impact of Liquidity on the Capital Structure: Evidence from Malaysia

2016 ◽  
Vol 8 (10) ◽  
pp. 130 ◽  
Author(s):  
Maziar Ghasemi ◽  
Nazrul Hisyam Ab Razak
Keyword(s):  
Capital Structure ◽  
Short Term ◽  
Current Ratio ◽  
Debt Level ◽  
Asset Liquidity ◽  
Independent Variable ◽  
The Impact ◽  
A Company ◽  
The Capital Structure

<p class="Content">For many years, liquidity of a company’s asset and its effect on the optimal debt level has been a controversial issue among scholars in finance studies. Prior studies have demonstrated that in some countries, asset liquidity increased debt level while in other countries liquid companies were less leveraged and more regularly financed by their own capital. This study investigates the effect of liquidity on the capital structure among the 300 listed companies in the Main market of Bursa Malaysia from 2005 to 2013 fiscal years. Pooled OLS is applied to investigate the impact of liquidity ratios on different Debt ratios. Liquidity of a company, which is the independent variable of this study, is measured by two common ratios which are: quick ratio and current ratio. Additionally, the Debt/Equity and Debt/Asset ratios represent the capital structures based on the short-term, long-term and total debt. The results show that all the measures of liquidity have significant impacts on all the proxies of leverage. According to the results, Quick ratio has a positive effect on leverage; although, Current ratio is negatively related to leverage. Moreover, short-term debt is more influenced by liquidity compared to long-term debt.</p>

scholarly journals Capital Structure and Firms’ Performance: Evidence from Vietnam’s Stock Exchange

2015 ◽  
Vol 7 (12) ◽  
pp. 1 ◽  
Author(s):  
Tristan Nguyen ◽  
Huy-Cuong Nguyen
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Debt Maturity ◽  
Management Process ◽  
Short Term ◽  
Fixed Assets ◽  
Two Factors ◽  
The Impact ◽  
Very High

<p>Our paper examines what impact capital structure has on firms’ performance in selected firms listed on HCMC Stock Exchange. The data is collected from 147 listed companies during the period from 2006 to 2014. The study not only checks the impact the level of leverage has on firms’ performance, which is found to be negative in this study, but it also uses the short-term and long-term debt ratios to see the effect of debt maturity. However, there is no difference whether it is short-term or long-term. Tangibility is found to be negative with a very high proportion on average. With the suggestion that companies might invest too much in fixed assets and there is a lack of efficiency, this could be the alert for firms to improve their management process. Size and growth are found to be positive, since larger firms have lower costs of bankruptcy and higher growth rates associate with higher performance. Moreover, the study also adds the effects of industry and macroeconomics, and the result shows a correlation between the two factors and firms’ performance.</p>

scholarly journals Statistical Analysis of Causality between Capital Structure and Firm Profitability: Evidence from Bosnia and Herzegovina

2015 ◽  
Vol 1 (1-2) ◽  
pp. 1-11
Author(s):  
Emina Resić ◽  
Jasmina Mangafić ◽  
Tunjo Perić
Keyword(s):  
Capital Structure ◽  
Bosnia And Herzegovina ◽  
Canonical Correlation ◽  
Debt Structure ◽  
Short Term ◽  
The Relationship ◽  
Structure Choice ◽  
Capital Structure Choice ◽  
The Capital Structure

Abstract This research is designed to examine the relationship between the capital structure and profitability of non-financial firms in Bosnia and Herzegovina during the ten years period, from 2003-2012. The goal is to prove the existence of the relationship between the firm’s capital structure choice and its profitability. The analysis is extended by including the debt structure and differentiating between the types of debt such as the long-term and the short-term ones. Canonical correlation and multiple regression analysis are used. The results of the multivariate canonical correlation analysis provide support to a hypothesis that the capital structure and profitability have statistically significant relationships. Furthermore, the findings provide support that firms develop different patterns of profitability depending on the capital structure choice. We found that an increasing proportion of short-term debt and long-term debt in the overall liability of the firm reduces its profitability.

scholarly journals Capital structure: Empirical evidences of public and non-public firms in Brazil

2015 ◽  
Vol 12 (3) ◽  
pp. 223-232
Author(s):  
Gabriel Hideo Sakai de Macedo ◽  
Joelson Oliveira Sampaio ◽  
Eduardo Flores ◽  
Pedro Luiz Aprigio
Keyword(s):  
Capital Structure ◽  
Cash Flow ◽  
Stock Exchange ◽  
Credit Market ◽  
Convertible Debt ◽  
Short Term ◽  
Private Companies ◽  
Public Companies ◽  
Public Firms

This study seek to contribute to the literature through research focused on companies listed and not listed on the stock exchange. A survey was used to identify the capital structure of Brazilian companies and relate the results to the Brazilian credit market. The results indicate that most of the investigated companies prefer not to issue convertible debt, as well as the share of firms issuing common shares was small. It was found that firms do not have preference between long-term and short-term debt. Finally, it was also noted that private companies have great concern about the volatility of earnings and cash flow. The differential of this research was to analyze the practices adopted by both public companies and privately held

scholarly journals Impact of Capital Structure on Profitability:An empirical analysis of listed firms in India

2018 ◽  
Vol 7 (2) ◽  
pp. 1-6
Author(s):  
Atif Ghayas ◽  
Javaid Akhter
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Short Term ◽  
Return On Equity ◽  
Listed Firms ◽  
Relationship Capital ◽  
The Impact ◽  
The Relationship ◽  
Positive Effect

This study aims to empirically examine and analyze the impact of capital structure decision on the firm’s profitability by using a sample of 35 Indian pharmaceutical companies listed on Bombay Stock Exchange (BSE) during the period of 5 years from 2012 to 2016. Regression Analysis is used to measure the extent and nature of the relationship. Capital structure variables used in the study are ratio of long-term debt to total assets (LDA), ratio of short-term debt to total assets (SDA) and ratio of Total debt to total assets (DA) while profitability has been measure by Return on Equity (ROE). Firms Size (SIZE)and Salesgrowth(GROW) are also used as control variables. Results reveal a positive effect of SDA and DA on ROE, while a weak-to-no effect was found of LDA on ROE.

scholarly journals Struktur Pendanaan dan Profitabilitas: Studi pada Perusahaan Non-Keuangan yang Listing di Bursa Efek Indonesia

2019 ◽  
Vol 1 (1) ◽  
pp. 55-66
Author(s):  
Irene Rini Demi Pangestuti ◽  
Dinar Nur Septiyanto
Keyword(s):  
Capital Structure ◽  
Random Sampling ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Short Term ◽  
Return On Assets ◽  
Negative Effect ◽  
Equity Ratio ◽  
Positive Effect

Purpose- The study was conducted to examine the effect of capital structure on profitability. Variables of the capital structure are Long-term Debt to total assets (LTD), Short-term Debt to total assets (STD) and Debt to Equity Ratio (DER) while profitability is proxied by Return on Assets (ROA. Research is conducted on all Non-Financial companies listed on the Indonesia Stock Exchange (IDX) in the period 2014-2016. Methods- Use the Purposive Random Sampling technique to take samples. Samples taken from Bloomberg. The sample used amounted to 175 companies using multiple regression analysis SPSS program assistance. Finding- The results of the study note that LTD and STD have a significant negative effect on ROA. DER has not a significant positive effect on ROA.

PENGARUII CORPORATE GOWRNANCE TERIIADAP STRUKTUR MODAL DAN KINERJA PERUSAHAAI\: STUDI EMPIRIS PADA FAMILY BASINESS GROUP YANG TERDAFTAR DI BURSA EFEK JAKARTA

2007 ◽  
Vol 2 (1) ◽  
pp. 23
Author(s):  
Freddy Iston Hasil Marbudi Pangaribuan
Keyword(s):  
Capital Structure ◽  
Internal Control ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Short Term ◽  
Internal Mechanism ◽  
Big Six ◽  
The Relationship

The aim of this research is to examine the effect of corporate governancet's internal mechanism that ls institutionii o*r"rriip, oi both firm performance and firm capital structure. To the extent, the moderating effect of managerial ownership on the relationship between institutional ownership,-fir* performance and capital structure wilt be examined as well.The sample of this research is drar,vn fro* companies within the big six family,owned business in Indonesia, which are listed at The Jakarta Stock Exchange fro* 1998 until 2005. Using the Moderated Regression Analysis (MRA),. the result shows that both institutional and managerial ownership fail to demonstrate the direct and moderated effect on both performance and capital structure. These findings suggest that the froil of economic, social and political circumstances create the "short term-focused" toward investment return. Moreover, the slow achiqement of collusion, corruption, and nepotism (KI< I) eradication has resulted in sudden-withdrawal of investor's investment. Hence, the internal control mechanism of corporate governance which is long-term focused and associated with KKI{ eradi cation cannot b e su cc es sfully impl em ent ed.Keywords: Institutional ownership, managerial ownership, performance,capital structure

Crisis Effects on the Capital Structure Determinants for Manufacturing Companies

2013 ◽  
pp. 225-240
Author(s):  
Osman Sahin
Keyword(s):  
Data Analysis ◽  
Capital Structure ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Hierarchy Theory ◽  
Manufacturing Companies ◽  
Crisis Period ◽  
Istanbul Stock Exchange ◽  
The Capital Structure

The purpose of the study is to investigate crisis effects on the capital structure determinants for manufacturing companies listed on the Istanbul Stock Exchange Market (ISE) in Turkey for the period 2005-2010. This period is divided into two parts: The period of 2005-2007 is used as pre-crisis period, and the period of 2008-2010 is used as a crisis period. The periods are compared to understand crisis effect on the capital structure determinants. The panel data analysis is used for this study. Short term, long term, and total debt ratios are used as a proxy for the analysis. The sample consists of 138 manufacturing companies in Turkey over the period of 2005-2010. As a result, manufacturing companies’ capital structure is usually determined in accordance with the financial hierarchy theory. During financial crisis, the effects of capital structure determinants deviate from expectations.

Sign in / Sign up

Export Citation Format

Share Document