scholarly journals Debt Capacity and Financial Performance of Quoted Firms in Nigeria

2021 ◽  
Vol 6 (2) ◽  
pp. 1-24
Author(s):  
Matthew Asaolu
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Significant Relationship ◽  
Market Performance ◽  
Performance Measure ◽  
Equity Capital ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Debt Capacity ◽  
The Capital Structure

Introduction: The field of research treating debt capacity can be comprehended as a unique piece of a lot more extensive capital structure hypothesis. This started with the paper of Modigliani/Miller in 1958. There has been a continuous and serious hypothetical dialog about the ideal capital structure of an organization. One generally new piece of the related discussion is debt capacity and potential connection to the capital structure of an organization. Purpose: The purpose of the study was to examine the effect of debt capacity and financial performance of quoted firms in Nigeria. This study expected that debt capacity can be a way to characterize and deal with the capital structure of an organization. Methodology: The study formulated 3 hypotheses and the least square multiple regression was used for hypothesis testing empirical results based on 2014 to 2018 accounting and marketing data for 20 quoted firms in Nigeria lend some support to the pecking order and static tradeoff theories of optimal capital structure. Data were sourced from the Nigeria Stock Exchange, Security and Exchange Commission, and other relevant data sources. This study investigated, experimentally, if there might be a significant relationship between the debt capacity of organizations and their financial and market performance.   Findings: A firm’s debt capacity was found to have a significant impact on the firm’s accounting performance measure. Debt capacity measures have a positive and significant relationship with the market performance measure (Tobin’s Q). A fascinating finding is that all the influence estimates have a positive and exceptionally critical association with the market execution measure (Tobin’s Q), which could somewhat bolster Myers, (1977)’s contention that organizations with high transient obligation to add up to resources have a high development rate and superior. Unique contribution to theory, practice and policy: The consequences of this result further affirm some earlier discoveries by different researchers and prior analysts and the exploration work has had the option to discover answers to the examination addresses prior brought up in the basic part in the accompanying ways. It was therefore recommended that Companies can finance themselves with debt and equity capital. By increasing the amount of debt capital relative to its equity capital, a company can increase its return on equity. Also, in transition, the economic environment is more volatile and riskier than in developed markets. Therefore, a management scheme of capital structure that provides for flexibility in financing is preferable.  

scholarly journals The Influence of Founder Status on Firm Performance: Empirical Evidence from Canadian IPO Firms

2016 ◽  
Vol 8 (11) ◽  
pp. 134 ◽  
Author(s):  
Saif Ullah ◽  
Dan Zhang
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Empirical Evidence ◽  
Firm Survival ◽  
Negative Influence ◽  
Performance Measure ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Survival Status ◽  
Income Stream

<p>This study compares performance for founder-managed firms and professional-managed firms by analyzing 138 Canadian IPO firms that went public from 2004 to 2013. In this paper, we measure firm performance in two ways: Tobin’s Q and ROA are used to measure a firm’s financial performance, while firm survival status is used as a supplementary performance measure. We find that founder-managed firms underperform and underlive their counterparts when firm performance is measured by Tobin’s Q and survival status. Founder status is proved to be unrelated to ROA. The negative influence of founder status can be explained by the relevant transaction hypothesis, which states that founder-managers may act for the controlling family and are more concerned with the associated private income stream than with maximizing the value of the firm.</p>

scholarly journals ANALYSIS OF CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE IN THE JORDANIAN INSURANCE SECTOR

2020 ◽  
Vol 8 (3) ◽  
pp. 1310-1320
Author(s):  
Zelhuda Shamsuddin ◽  
Al Majali Muhammad Ahmad Kamel ◽  
Wan Mohd Nazri Wan Daud ◽  
Wan Sallha Yusoff
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Insurance Companies ◽  
Tobin’S Q ◽  
Short Term ◽  
Equity Financing ◽  
Tobin's Q ◽  
Return On Equity ◽  
Insurance Firms ◽  
The Impact

Purpose of the study: This paper aims to examine the impact of capital structure and financial performance of listed insurance companies in Jordon. Methodology: This study used secondary data that was collected from Amman stock exchange and annual report of the selected insurance companies from the year 2007-2017. The static panel data analysis technique is used to examine the impact of capital structure on firm’s performance. The capital structure is measured using short-term debt, long-term debt, and equity financing. Whereas financial performance is measured using Return on Asset (ROA), Return on equity (ROE), and Tobin’s Q. Main Findings: The study findings suggest that capital structure influence the profitability of the listed insurance firms in Jordan. The results also reveal a significantly positive relation between long-term debt to total assets to profitability indicators, namely, return on assets (ROA), return on equity (ROE) and Tobin’s Q. On the other hand, the results also reveal a short-term debt has a significant positive relationship with return on equity (ROE) and returns on assets (ROA). However, a relationship between short-term debt and Tobin’s Q is not statistically significant. Applications of this study: The result of this study may assist the insurance sector in Jordon in making decisions regarding capital structure, which is to significantly rely on equity financing or debt financing to reduce financing risk such as agency cost that borne by the equity holders of the Jordanian insurance firms. Novelty/Originality of this study: The study noted that insurance firms generally play a crucial role in the economic development of every country. This study provides evidence that Jordanian insurance firms need to diversify their sources of financing and not rely significantly on debt financing, as the results prove that equity financing is a profitable source of financing.

scholarly journals PENGARUH PROFITABILITAS TERHADAP NILAI PERUSAHAAN PERHOTELAN DAN PARIWISATA DENGAN STRUKTUR MODAL SEBAGAI VARIABEL INTERVENING

2020 ◽  
Vol 14 (1) ◽  
pp. 46-57
Author(s):  
Robiyanto Robiyanto ◽  
Ilma Nafiah ◽  
Harijono Harijono ◽  
Komala Inggarwati
Keyword(s):  
Capital Structure ◽  
Firm Value ◽  
Stock Exchange ◽  
Panel Regression ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Insignificant Effect ◽  
Company Value ◽  
Research Show ◽  
The Capital Structure

This study aims to examine the effect of profitability on firm value with capital structure as an intervening variable. The population of this study is hotel, restaurant and tourism firms listed on the Indonesia Stock Exchange (IDX), during 2012-2016, with 75 samples selected by using purposive sampling. Analysis of this study using panel regression analysis. This study of the research show that (1) profitability as measured by ROA and ROE has a negative and significant effect on firm value as measured by PBV and profitability as measured by ROA and ROE has a negative and insignificant effect on firm value as measured by Tobin's Q, (2) profitability has a negative and significant effect on the capital structure, (3) the capital structure as measured by DER has a positive and significant effect on firm value as measured by PVB and the capital structure as measured by DER has a positive and insignificant effect on company value as measured by Tobin's Q and (4) capital structure as an intervening variable negatively influences the effect of profitability on firm value.

scholarly journals The Influences of Sustainability Report and Corporate Governance toward Financial and Entity Market Performance with Political Visibility as Moderating Variable

2017 ◽  
Vol 8 (1) ◽  
pp. 61 ◽  
Author(s):  
Ingrid Panjaitan
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Structural Equation ◽  
Market Performance ◽  
Equation Modeling ◽  
Tobin’S Q ◽  
Return On Assets ◽  
Tobin's Q ◽  
Sustainability Report

The aim of this research was to identify the effect of corporate governance and sustainability report on the financial performance of entities, and corporate governance and sustainability report on the market entity with political visibility as moderating variable. Sustainability report was measured by a dummy variable by the Corporate Governance Scorecard with Indonesian Institute for Corporate Directorship (IICD). Then, financial performance as measured by profitability ratio (ROA) and Liquidity Ratio (CR), as well as the market performance were measured using Tobin’s Q. Meanwhile, the political visibility was measured by the log of total assets. The analysis of the data used Path Analysis method with Structural Equation Modeling (SEM). The analysis shows four results by using political visibility as moderating variable. First, the quality of corporate governance affects the financial performance. Second, the quality of corporate governance influences Tobin’s Q. Third, the sustainability report has an effect on the Return on Assets and current ratio. Last, sustainability report also affects Tobin’s Q.

scholarly journals The influence of capital structure on company performance: Evidence from Egypt

2020 ◽  
Vol 18 (1) ◽  
pp. 8-21
Author(s):  
Amani Hussein
Keyword(s):  
Capital Structure ◽  
Performance Measures ◽  
Structure Theory ◽  
Company Performance ◽  
Tobin’S Q ◽  
Short Term ◽  
Tobin's Q ◽  
And Performance ◽  
The Capital Structure

The capital structure decision is crucial for any company to maximize shareholders’ wealth and deal with its competitive environment. The research aims to examine the capital structure influence on company performance in Egypt. This research uses a sample of 168 Egyptian companies during 2012-2016 and applies panel data techniques. Eight hypotheses are proposed to test the influence of both the short-term debt and the long-term debt (as proxies of capital structure) on four performance measures (ROA, ROE, EPS, and Tobin’s Q) The research results indicate that short-term debt to assets significantly negatively affects all performance measures except for Tobin’s Q. Short-term debt to assets significantly positively affects the value of Tobin’s Q. On the other hand, the results show that long-term debt to assets affects significantly negatively return on assets but positively affects the return on equity. Therefore, the research concludes that the relevance of the capital structure theory to Egyptian companies’ behaviour is influenced by both debt and performance measures utilized.

أثر الأداء المالي للبنوك وقيمتها السوقية على المسؤولية الاجتماعية دراسة تطبيقية على قطاع البنوك والخدمات المالية في بورصة فلسطين

2018 ◽  
Vol 5 (1) ◽  
pp. 515-544
Keyword(s):  
Social Responsibility ◽  
Financial Performance ◽  
Significant Relationship ◽  
Performance Indicators ◽  
Market Value ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Return On Equity ◽  
Earnings Per Share ◽  
The Impact

ملخص: تهدف هذه الدراسة لمعرفة أثر كل من مؤشرات الأداء المالي ومؤشرات القيمة السوقية على المسؤولية الاجتماعية في البنوك المدرجة في بورصة فلسطين خلال الفترة الواقعة (2011 – 2017). واعتمدت الدراسة على المنهج الاستقرائي للجانب النظري والمنهج الاستنباطي التحليلي للجانب التطبيقي للدراسة. أظهرت نتائج الدراسة التطبيقية وجود علاقة إيجابية (طردية) بين كل من العائد على الموجودات، والعائد على حقوق الملكية، وعائد السهم، ومؤشر Tobin’s Q، وملاءمة رأس المال على المسؤولية الاجتماعية، وعلاقة سلبية (عكسية) بين باقي متغيرات الدراسة، ونتيجة ثبوت وجود علاقات فقد تم تطبيق نموذج الانحدار الخطي المتعدد باستخدام اختبار (F)، حيث تم قبول جميع الفرضيات الصفرية بعدم وجود علاقة ذات دلالة إحصائية بين متغيرات الدراسة على المسؤولية الاجتماعية، ماعدا متغير العائد على حقوق الملكية وعائد السهم فقد تم قبول الفرض العدم عند مستوى معنوية أقل من (0.05) وعلية يوجد أثر ذو دلالة إحصائية بين مؤشرات الأداء المالي التقليدية الممثلة في العائد على حقوق الملكية وعائد السهم على المسؤولية الاجتماعية. توصي الدراسة بضرورة قيام سلطة النقد الفلسطينية بدورها في الإشراف على البنوك والتأكد من نسبة المساهمة في المسؤولية الاجتماعية تساوي 2% من صافي الربح على الأقل، وتقديم مكافآت لكل من يلتزم. الكلمات المفتاحية: المسؤولية الاجتماعية، الأداء المالي، القيمة السوقية. Abstract The aim of this study is to investigate the impact of both the financial performance indicators and the market value indicators on social responsibility in the banks listed on the Palestine Stock Exchange during the period (2011-2017). The study used the inductive method for the theoretical part and the deductive analytical approach for the applied part of the study.The results of the applied study showed a positive relationship between the Return on assets, Return on equity, Earnings per share, Tobin’s Q and capital adequacy on Social Responsibility, and negative relation between other variables of the study, There were no statistically significant relationship between the variables of the study on social responsibility, except for the variable return on equity and return on stock. The null hypothesis was accepted at a lower level of significance of (0.05). There is a statistically significant effect between the traditional financial performance indicators represented in thereturn on equity and earnings per share on social responsibility.The multiple linear regression model was applied using the (F-Test) to proof the existence of relationships. All zero hypotheses were accepted. There was no statistically significant relationship between the variables of the study on social responsibility except the variable Return on equity and Earnings per share. Less than (0.05). Accordingly, There is statistically significant impact between the traditional financial performance indicators represented in the return on equity and earnings per share on social responsibility.The study recommends that the Palestinian Monetary Authority should also supervise the banks and ensure that the contribution of social responsibility is equal to at least 2% of the net profit and provide rewards to all those who commit.Keywords: Social Responsibility (SR), financial performance, Market Value. Keywords: Social Responsibility (SR), financial performance, Market Value

scholarly journals The Impact of the Financial Performance on Capital Structure of Insurance Industry in Egypt

2021 ◽  
Vol 14 (7) ◽  
pp. 103
Author(s):  
Salah Mohamed Eladly
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Significant Relationship ◽  
Return On Investment ◽  
Insurance Industry ◽  
Panel Data Analysis ◽  
Return On Equity ◽  
Study Results ◽  
The Impact ◽  
The Capital Structure

This paper attempts to investigate the impact of the profitability and liquidity on capital structure of insurance industry in Egypt as applied on a sample of (19) insurance firms represented in the Egyptian insurance industry over the period from 1999-2019. The capital structure is measured by debt ratio, and the financial performance is measured by (liquidity, return on equity, and retune on investment).The study results show that there are significant negative linear relationships between the independent variable in terms of return on equity (X1), return on investment (X3), and dependent variable for the capital structure (Y) at the level of significant less than (0.001); based on panel data analysis, the results show that Tau-statistic, and z-statistic, are at a significant level less than (0.05).The statistical conclusion is the null significant relationship between the capital structure and liquidity, while there is a significant relationship between the capital structure, return on equity, and return on investment. The results&nbsp; also show that the R2 for the independent variables are accepted in the model (capital structure Y, lag Y1, return on equity X1, liquidity X2, and return on investment) by (79.3%) from total variation of capital structure (Y).

scholarly journals Effects of Infrastructure Development, Inflation and Economic Growth to Performance Company (ROA, Tobin's Q, PBV): Study on Registered Infrastructure Support Companies in IDX Period 2014-2019

2021 ◽  
Vol 4 (3) ◽  
Author(s):  
Eko Sarjono ◽  
◽  
Kartika Hendra Titisari ◽  
Supawi Pawenang
Keyword(s):  
Economic Growth ◽  
Performance Measurement ◽  
Financial Performance ◽  
Stock Exchange ◽  
Hypothesis Test ◽  
Linear Regression Analysis ◽  
Infrastructure Development ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
The Impact

The financial performance can be used as a benchmark of the ability of an organization or company in achieving its goals. Performance measurement is one of the most important factors for an organization or company, performance measurement is a process of measuring the extent to which a company does work to achieve its goals. The research investigated the impact of infrastructure, economic growth and inflation on financial performance of infrastructure support companies listed in Indonesian Stock Exchange Period 2014-2019 which is proxied by ROA (Return on Assets), Tobin’s Q and PBV (Price to Book Value). The population of this research was the infrastructure support companies listed on the Indonesian Stock Exchange period 2014-2019. Research sampling was conducted using The Purposive Sampling Method. The data analysis was camed out using classical assumption test, multiple linear regression analysis, t-test, F-test and determinan (R2) test with SPSS 21. The research finding showed that the model has an effect on the financial performance as proxied by ROA. So the results of the hypothesis test show that: (1) Infrastructure development has a negative and significant effect on ROA. (2) The inflation rate has a positive and significant effect on ROA. (3) Economic growth has no significant effect on ROA. Meanwhile, the model has no effect on financial performance which is proxied in Tobin's Q and PBV.

PANDEMI COVID-19: LEBIH BAIK MENAMBAH UTANG ATAU EKUITAS?

2021 ◽  
Vol 19 (1) ◽  
pp. 23
Author(s):  
Bayu Aprillianto ◽  
Oktaviani Ari Wardhaningrum
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Banking Sector ◽  
Stock Exchange ◽  
Equity Capital ◽  
Debt Capital ◽  
Huge Impact ◽  
The Government ◽  
Operational Activities ◽  
Positive Effect

ABSTRACTCovid-19 Pandemic has caused massive changes. Lockdown policy set by the government to suppress the rate of transmission of the virus has had huge impact on the economy. Many companies must suffer losses, even have to declare bankruptcy. Operational activities had been limited that caused the company no longer being able to rely on internal funding to finance its business. The company is faced with a choice of external funding decisions, that is increasing debt (on liability side) or issue shares (on the equity side). This study aims to examine the effect of capital structure during the pandemic on financial performance. This research conducted on 121 companies from consumer non-cyclicals, transportation & logistic, and banking sector listed on Indonesia Stock Exchange. The results show that during the pandemic companies tend to prefer to increase debt than equity. Further testing shows that the companies with dominant debt capital structure have positive effect on financial performance. Meanwhile, the companies with a dominant equity capital structure have no significant effect.Keywords: debt, equity, financial performance, pandemicABSTRAKPandemi Covid-19 menyebabkan perubahan yang sangat masif. Kebijakan lockdown yang dilakukan oleh pemerintah untuk menekan laju penularan virus memberikan dampak yang sangat besar bagi perekonomian. Banyak perusahaan yang harus mengalami kerugian, bahkan harus mengumumkan kebangkrutan. Kegiatan operasional perusahaan yang terbatas mengakibatkan perusahaan tidak lagi dapat mengandalkan pendanaan internal untuk membiayai usahanya. Perusahaan dihadapkan pilihan keputusan pendanaan eksternal, yaitu menambah utang (di sisi liabilitas) atau menerbitkan saham (di sisi ekuitas). Penelitian ini bertujuan untuk menguji pengaruh struktur modal di masa pandemi terhadap kinerja keuangan. Pengujian dilakukan ke 121 perusahaan dari perusahaan sektor barang konsumen non-primer, transport dan logistik, dan perbankan yang terdaftar di Bursa Efek Indonesia. Hasil penelitian menunjukkan bahwa di masa pandemi, perusahaan cenderung lebih memilih menambah utang dibandingkan ekuitas. Pengujian lebih lanjut menunjukkan bahwa sampel perusahaan dengan struktur modal dominan utang menunjukkan hasil berpengaruh positif pada kinerja keuangan. Sedangkan pada sampel perusahaan dengan struktur modal dominan ekuitas menunjukkan hasil tidak signifikan.Kata kunci: ekuitas, kinerja keuangan, pandemi, utang

scholarly journals Income Diversification and Financial Performance of Selected Deposit Money Banks in Nigeria

2021 ◽  
Vol 8 (1) ◽  
pp. 1-17
Author(s):  
Emmanuel Uniamikogbo ◽  
Emma I. Okoye ◽  
Arowoshegbe O. Amos
Keyword(s):  
Financial Performance ◽  
Foreign Exchange ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Annual Reports ◽  
Tobin’S Q ◽  
Firm Age ◽  
Income Diversification ◽  
Tobin's Q ◽  
Negative Effect

This study examined the effect of income diversification on financial performance of deposit money banks (DMBs) in Nigeria. Variables considered were commission, foreign exchange incomes, and firm age, which are proxies for income diversification and financial performance proxied by Tobin's Q ratio. The purposive sampling technique was used to select the 8 banks classified by Central Bank of Nigeria to be Domestic Systematically Important Banks in Nigeria. Data collected from the annual reports and the Nigerian Stock Exchange website for a period 2008-2018 were used. Statistical tools used were the descriptive statistics and econometric analysis using the panel data. Findings showed that while commission income has a significant positive effect on Tobin's Q ratio of DMBs, foreign exchange income and firm age each have a significant negative effect on Tobin's Q ratio of DMBs in Nigeria. It is recommended that banks in Nigeria minimize their income from foreign exchange to maximize performance since income from these transactions tend to inhibit bank financial performance.

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