scholarly journals Uncertainty and Capital Structure: Evidence from an Emerging Country

2021 ◽  
Vol 11 (2) ◽  
pp. 1700-1715
Author(s):  
Hoang Duc Le
Keyword(s):  
Capital Structure ◽  
Policy Makers ◽  
Corporate Capital ◽  
Emerging Country ◽  
Corporate Capital Structure ◽  
Lag Model ◽  
High Level ◽  
General Method Of Moments ◽  
The Impact ◽  
General Method

This paper investigates the impact of uncertainty on corporate capital structure. Using a sample consists of manufacturing firms listed in the Vietnamese Stock Market during the period from 2010 to 2019, we find that an increase in uncertainty can lead to a reduction in the corporate use of debt. This result is robust when we use a lag model or a System General Method of Moments to deal with the endogeneity problems. Moreover, our result shows that firms decrease their leverage when facing a high level of uncertainty because the increase in leverage during the heightened uncertainty periods may reduce firms’ investment. Given that firms in emerging countries in general and in Vietnam in particular rely significantly on debt financing, the results of our paper suggest that policy makers should have solutions to mitigate the adverse impact of uncertainty on firm leverage.

A Survey on the Effects of Defeasing Debt

1987 ◽  
Vol 2 (1) ◽  
pp. 65-78 ◽  
Author(s):  
David E. Mielke ◽  
James Seifert
Keyword(s):  
Capital Structure ◽  
Balance Sheet ◽  
Annual Reports ◽  
Corporate Capital ◽  
Disclosure Requirements ◽  
Practical Concern ◽  
Corporate Capital Structure ◽  
Accounting Rules ◽  
Financial Characteristics ◽  
The Impact

Defeasance of debt is a relatively new tool for the management of the corporate balance sheet. The accounting rules for reporting these transactions have generated a great deal of controversy. Critics claim that the ability to record an extraordinary gain from the defeasance of debt permits the reporting of paper profits. Additionally, some were concerned about the disclosure requirements and with potential for the promotion of wholesale major changes in corporate capital structure. A survey was conducted to gain insight as to why companies might defease debt, to examine the impact of defeasance on the firm's financial characteristics, and to investigate the type of disclosure provided in the annual reports. Analysis of the results indicates that the critics have little practical concern. The paper profits and balance sheet changes in this sample were relatively minimal. The major problem found was with the relatively little information that corporations provided regarding these transactions.

scholarly journals Macroeconomic uncertainty, corporate governance and corporate capital structure

2018 ◽  
Vol 14 (3) ◽  
pp. 301-321 ◽  
Author(s):  
Yee Peng Chow ◽  
Junaina Muhammad ◽  
A.N. Bany-Ariffin ◽  
Fan Fah Cheng
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Good Governance ◽  
Policy Makers ◽  
Content Type ◽  
Corporate Capital ◽  
Macroeconomic Uncertainty ◽  
Corporate Capital Structure ◽  
Governance Quality ◽  
The Relationship

PurposeThe purpose of this paper is to examine how corporate governance moderates the relationship between macroeconomic uncertainty and corporate capital structure.Design/methodology/approachThis paper employs the two-step system generalized method of moments regression, considering a sample of 907 listed non-financial firms from seven Asia Pacific countries during the period 2004-2014.FindingsThis study finds that macroeconomic uncertainty has a significant negative impact on the capital structure decisions of firms. The results also reveal that the overall effect of macroeconomic uncertainty on capital structure among firms with better governance quality is significantly negative. The evidence suggests that corporate governance acts as an effective mechanism to curb the usage of leverage during times of high volatility. Further analysis shows that board independence, the separation between the roles of CEO and chairman of the board and blockholders’ ownership are effective governance mechanisms, whereas similar observations do not hold for board size and institutional ownership.Research limitations/implicationsThe findings of this study may be useful to policy makers to formulate appropriate policies to mitigate the adverse effects caused by macroeconomic uncertainty. This is important because macroeconomic uncertainty may have potential destabilizing effects on a country’s or region’s development by jeopardizing the firms’ ability to formulate sound investment, production and financing decisions. Additionally, the results suggest that good governance quality can act as a check and balance to ensure that firms use less leverage when they are facing volatility in the macroeconomic environment. These findings could help to reinforce the importance of good governance among policy makers of a country as well as managers of firms.Originality/valueThe authors make the first attempt to examine the moderating effect of corporate governance on the relationship between macroeconomic uncertainty and corporate capital structure.

scholarly journals Relationship between Corporate Capital Structure and Stocks Liquidity: Empirical Evidence in Vietnam

2020 ◽  
Vol 10 (2) ◽  
pp. 151
Author(s):  
Van Thi Thuy Vu ◽  
Thoa Thi Tran ◽  
Xuan Thanh Ngo ◽  
Linh Nhat Nguyen
Keyword(s):  
Capital Structure ◽  
Inverse Relationship ◽  
Stock Exchange ◽  
Ho Chi Minh City ◽  
Corporate Value ◽  
Corporate Capital ◽  
Corporate Capital Structure ◽  
Business Size ◽  
The Impact ◽  
The Capital Structure

The paper examines the impact of capital structure on the liquidity of listed shares on the Ho Chi Minh City Stock Exchange, which includes 1078 observations during the period of 2011 – 2017. In addition to the capital structure, the study also looked at the impact of controlled variables including profitability (ROS), corporate value (Tobin’s Q) and size of the business (SIZE) on the liquidity of listed shares. The results show that the capital structure has inherently inverse relationship, while the controlled variables in the model have a positive relationship with stocks’ liquidity.

scholarly journals Lessons learned from the effect of tight monetary conditions and crises on corporate capital structure

2016 ◽  
pp. 27-38
Author(s):  
Marianna Gergelyné Kása
Keyword(s):  
Capital Structure ◽  
Lessons Learned ◽  
Empirical Literature ◽  
Financial Policy ◽  
External Financing ◽  
Corporate Capital ◽  
Research Areas ◽  
Open Research ◽  
Corporate Capital Structure ◽  
The Impact

The study reviews the theoretical and empirical literature on the effect of tight monetary conditions, crisis on corporate capital structure, further creates a framework for analyzing their relation, as well as sheds light on the lessons learned and open research areas. The results highlight that the supply side of capital has an effect on corporate capital structure, though the analysis of this relation is scarce. However, the impact of tight monetary conditions on capital structure is analyzed by several studies, there is limited evidence on the financial policy and the development of financing mix during a crisis period. The impact of the 2007/08 crisis on the corporate capital structure and especially in case of firms with impaired access to external financing is scarce. The study also highlights our lack in understanding of the relation of crisis and capital structure in case of the CEE region.

Sign in / Sign up

Export Citation Format

Share Document