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 Capital Structure and Firm’s Profitability: Evidence From Listed Consumer Goods Sector in Nigeria

2020 ◽  
Vol 9 (2) ◽  
pp. 50
Author(s):  
Udobi-Owoloja, P. I. ◽  
Gbajumo-Sheriff, M.A. ◽  
Umoru, B. ◽  
Babatunde, S.A ◽  
Ilimezekhe, D
Keyword(s):  
Capital Structure ◽  
Consumer Goods ◽  
Stock Exchange ◽  
Total Asset ◽  
Short Term ◽  
Interest Payment ◽  
Financial Reports ◽  
Listed Firms ◽  
The Impact

This study investigated the impact of capital structure on profitability of consumer goods firms in Nigerian for a period of eight years (2011-2018). Data of ten (10) randomly selected listed firms of the Nigeria Stock Exchange were derived from the firms’ published financial reports for the period covered. The panel regression results revealed that Debt to Asset Ratio(DAR) is positively significant on Return On Asset(ROA) (Proxy for profitability),while other proxies of capital structure shows that Debt to Equity(DER), Liquidity Ratio(LIQ), are not statistically significant, Short Term Debt to Total Asset Ratio (SDTA) shows a negative connection, Firm Size (FS) has a weak correlation with profit and Long Term Debt to Total Asset Ratio (LDTA) do not influence firms’ profitability of the consumer goods sector of Nigeria economy. In conclusion, capital structure influences the profitability of consumer goods sector of Nigerian Stock Exchange. It was recommended that firms in that sector should leverage on debt financing to boost their earnings as interest payment on debt is tax deductible.

An Empirical Study on Capital Structure and Corporate Performance of Chinese Listed Companies

2016 ◽  
Vol 5 (3) ◽  
Author(s):  
Fahd Al-Duais
Keyword(s):  
Capital Structure ◽  
Corporate Performance ◽  
Positive Impact ◽  
Stock Exchange ◽  
Listed Companies ◽  
Short Term ◽  
Chinese Listed Companies ◽  
The Impact ◽  
The Relationship

The relationship between level of debt and the companys performance remains an important unsolved issue in the field of financing. It is very important to know how Chinas listed companies manage their capital towards business growth. This paper investigates the impact of the capital structure on corporate performance of a sample of 711 listed companies on the Shenzhen Stock Exchange in China in 2014. The results indicates that there is a positive relation between financial leverage and corporate performance as well as there is a positive impact that the mixture of long-term debt and short-term debt (using total debt). This would help decision maker in the companies to finance firms operation in the both periods. On the other hand, the short term debt has a negative relation and impact on corporate performance compared to the changing in firm size which cannot change in the profitability of firms.

scholarly journals Analisis Pengaruh Struktur Modal Terhadap Profitabilitas Perusahaan Sektor Konsumsi Yang Terdaftar Di Bursa Efek Indonesia Periode 2014-2016

2019 ◽  
Vol 3 (4) ◽  
Author(s):  
Christopher Christopher
Keyword(s):  
Capital Structure ◽  
Service Industry ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Return On Equity ◽  
Listed Firms ◽  
Lending Institutions ◽  
The Relationship ◽  
Financing Option

The relationship between capital structure and profitability cannot be ignored because the improvement in the profitability is necessary for the long-term survivability of the firm. This paper seeks to investigate the relationship between capital structure and profitability of listed firms on the Indonesia Stock Exchange during a three-year period. A sample of 35 Indonesia firms listed on Indonesia Stock Exchange for a period of 3 years from 2014-2016 was selected. The correlations and regression analysis were used to estimate the functions relating to profitability (measured by return on equity) with measures of capital structure. Empirical results show a positive relationship between i) short-term debt to total assets and profitability and ii) total debt to total assets and profitability in the service industry, and negative relationship between long-term debt to total assets and profitability. This paper offers useful insights for the owners/operators, managers, and lending institutions based on empirical evidence, and suggests that profitable firms depend more on debt as their main financing option.

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 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.

scholarly journals Capital Structure and Bank Performance: Empirical Evidence from Bangladesh

2020 ◽  
Vol 12 (1) ◽  
pp. 161
Author(s):  
Md. Ibrahim Molla
Keyword(s):  
Capital Structure ◽  
Positive Impact ◽  
Stock Exchange ◽  
Positive Influence ◽  
Bank Performance ◽  
Total Debt ◽  
Relationship Of ◽  
The Impact ◽  
The Relationship

The paper empirically investigates the relationship between capital structure and the performance of listed banks in Bangladesh using panel data over the period of five years from 2014-2018. To estimate the association between leverage level and bank performance the Panel Corrected Standard Error (PCSE) model is used in this study and the findings indicate that long term debt has a positive influence on the performance of banks which is measured in terms of ROA and ROE. This implies that long term debts are associated with the higher performance of banks listed in Bangladesh. The regression results also reveal that the capital structure component of total debt has no statistically significant impact on ROA, ROE and EPS but it has a significant positive impact on the performance of banks measured by price earning ratio. Furthermore, this analysis finds no relationship of long term debt and total debt with the EPS. These findings lead to conclude that capital structure has a weak to no influence on the performance of listed banks in Bangladesh. This paper is the first research attempt that investigates the impact of capital structure on the performance of all banks listed on the Dhaka Stock Exchange in Bangladesh.

The Effect of Capital Structure, Size and Revenue Growth on the Effectiveness of Garment Businesses Listed on Vietnam’s Stock Market

2019 ◽  
Vol 35 (4) ◽  
Author(s):  
Do Huy Thuong ◽  
Tran Luu Ngoc ◽  
Nguyen Thi Phuong Hong
Keyword(s):  
Stock Market ◽  
Capital Structure ◽  
Firm Size ◽  
Business Performance ◽  
Negative Impact ◽  
Short Term ◽  
Return On Equity ◽  
Revenue Growth ◽  
The Impact

Considering the impact of the capital structure on the effectiveness of businesses is extremely important. Therefore, this study is conducted in order to find the influences of capital structure, firm size and revenue growth on the performance of the garment businesses listed on Vietnam stock market in the period of 2013-2018 with the representation of return on equity (ROE). The research with the use of panel data has shown that the ratio of short-term debt on total assets, the firm size and the revenue growth all have positive impacts on business performance. Meanwhile, the ratio of long-term debt on total assets has a negative impact on the performance of garment businesses at the statistically significant level of 5%.

Empirical Analysis of Dependence on Capital Structure with Respect to Its Impact on the Financial Performance of Domestic Non Financial Listed Stock Exchange Companies Operating in the Public Sector of Pakistan

2016 ◽  
Vol 3 (2) ◽  
pp. 58-76
Author(s):  
Syed Jawad Hussain Shahzad ◽  
Memoona Kanwal
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Stock Exchange ◽  
Random Effect ◽  
Random Effect Model ◽  
Research Work ◽  
Debt Financing ◽  
The Impact ◽  
The Relationship

This research work is based on the relationship that exists between the capital structure and performance of different sector's firms currently operating in the Pakistan. Capital structure decisions can be considered as the most important financial performance and risk management tools which are available to the companies' management. Capital structure can also play an important role in performance assessment, in performance management and in effective handling of ownership claims. The extensive use and heavy dependence on debt has exposed many companies to potential risk of declined performance and also to the risk of insolvency. This study analyzes the relationship between various capital structure indicators and dependence of financial performance of companies on these indicators using a broad sample covering 202 non-financial firms listed on Karachi Stock Exchange (KSE) over the period of 1999-2012. The sample firms are divided into five sectors i.e. Textile, Chemical, Cement, Food and Fuel & Energy. Financial performance of firms is quantified by Return on Assets (ROE), Return on Equity (ROE), Price-Earnings ratio (PE) and Tobin's Q (TQ). The relationship between financial performance measures and capital structure measures i.e. total debt, short term debt and long term debt is estimated using GLS fixed and random effect model. Sector wise comparison shows that majority of the sectors have similar capital structure. The impact of capital structure on the financial performance is also similar across sectors with few variations. Overall the relationship is found to be negative among capital structure and firm performance measured by ROA, ROE and PE except TQ which is positively related to Long Term Debt to total Assets (LTDA). The result of industry wise comparison contributes significantly to the existing stream of knowledge. The results indicate that lower reliance on the debt financing improves the performance of the firm whereas dependence and exposure of debt financing reduce performance. The research can be useful for the management of companies in different sectors that want to improve their performance.

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

scholarly journals The Impact of Different Firm Sizes on Capital Structure Determinants Among Listed Consumer Product Firms In Malaysia

2018 ◽  
Vol 5 (2) ◽  
pp. 1-6
Author(s):  
Hishan S Sanil ◽  
Ahmad Amirul Arsyad bin Noraidi ◽  
Suresh Ramakrishnan
Keyword(s):  
Capital Structure ◽  
Annual Report ◽  
Fixed Effect ◽  
Consumer Product ◽  
Short Term ◽  
Effect Analysis ◽  
Total Debt ◽  
The Impact ◽  
The Relationship

This research is conducted to determine the impact of different firm sizes on the relationship between capital structure determinants and leverage among listed consumer product firms in Malaysia from year 2006 to 2015. All data was taken from annual report of the companies by using DataStream. In 2015, 130 firms were listed in Bursa Malaysia under the consumer product sector. However, only 108 firms were observed as several firms had insufficient data. This study uses the dependent variable of debt ratios i.e. short-term debt, long-term debt and total debt. The independent variables used are firm size, profitability, tangibility, liquidity, growth, non-tax debt shield and business risk. Those results were obtained by applying Pooled OLS and Fixed Effect Analysis. The main finding of this study is that different firm sizes will affect the relationship between capital structure determinants and leverage. The Fixed Effect analysis revealed that all determinants were significant across all types firm sizes. Furthermore, non-tax debt shield had the largest impact to all types of leverage across different firm sizes.

Sign in / Sign up

Export Citation Format

Share Document