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.

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

scholarly journals The Optimization of Capital Structure in Maximizing Profit and Corporate Value

2017 ◽  
Vol 8 (1) ◽  
pp. 41
Author(s):  
Kharisya Ayu Effendi
Keyword(s):  
Capital Structure ◽  
Descriptive Analysis ◽  
Order Theory ◽  
Corporate Value ◽  
Pecking Order ◽  
Quantitative Descriptive Analysis ◽  
Pecking Order Theory ◽  
Optimal Capital Structure ◽  
Optimal Capital ◽  
Quantitative Descriptive

The purpose of this research was to determine the optimal capital structure which could maximize profits and corporate value. The used method was quantitative descriptive analysis. Moreover, the data used was secondarydata in the Jakarta Islamic Index (JII) from 2011 to 2015. The results of this research show that companies which have optimal capital structure are in line with the trade-off theory models. The capital structure is optimal if thedebt levels are to a certain extent so that the corporate value will increase. However, if the debt limit passes the certain degree, profit and corporate value will decrease. Meanwhile, pecking order theory in this research doesnot conform and cannot be said to be optimal because of the low debt level describing the opposite result with the theory as low profits.

scholarly journals A Critical Review of Capital Structure Theories

2012 ◽  
Vol 4 (11) ◽  
pp. 553-557 ◽  
Author(s):  
Syed Muhammad Javed ◽  
Agha Jahanzeb . ◽  
Saif-ur-Rehman .
Keyword(s):  
Capital Structure ◽  
Critical Review ◽  
Market Timing ◽  
Order Theory ◽  
Agency Cost ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off

The purpose of this paper is to scrutinize and appreciate the theories of capital structure starting from theory of Miller and Modigliani (1958) of capital structure, which is also known as irrelevance theory of capital structure and also including theory like pecking order theory, trade off theory, market timing theory and agency cost theory. In addition, authors have tried to explain the theories and their contradiction with each other in detail. This paper will be an addition to understand the theories of capital structure.

scholarly journals Market Timing and Pecking Order Theory in Latin America

2021 ◽  
Vol 13 (2) ◽  
pp. 79-104
Author(s):  
Francisco Javier Vásquez Tejos ◽  
Hernan Pape Larre
Keyword(s):  
Capital Structure ◽  
Latin American ◽  
Market Timing ◽  
Order Theory ◽  
Annual Data ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Share Prices ◽  
Definitive Evidence ◽  
The Capital Structure

This article aims to determine if the capital structure of Latin American companies in the emerging markets of Brazil, Chile, Mexico, and Peru, are managed according to the market timing theory or the pecking order theory. The analysis was based on a non-probabilistic sample of 170 companies, with annual data, from an unbalanced panel, in the period 2010-2018. Regressions were applied with the fixed and random effects method. The results do not show significant evidence indicating that Latin American companies comply with the pecking order theory. Furthermore, there is also no definitive evidence that companies benefit from low share prices to issue capital or from debt issuance in the face of high stock market prices. There are signs that they follow a blend of several theories, which would indicate their characteristics in the capital structure of Latin American companies.

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 Firm Level Determinants of Capital Structure: Evidence From Egypt

2018 ◽  
Vol 10 (1) ◽  
pp. 68
Author(s):  
Ahmed Sakr ◽  
Amina Bedeir
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Agency Cost ◽  
Publicly Traded ◽  
Pecking Order ◽  
Firm Level ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Financial Firms ◽  
Time Period

The purpose of this paper is to investigate the firm level determinants of capital structure of Egyptian publicly traded non-financial firms. The study investigates the firm level determinants of capital structure of Egyptian companies utilising data from the financial statements of 62 listed companies over the time period from 2003 to 2016. The study investigates whether the capital structure decisions in Egypt are closer to the assumptions of Trade-Off Theory, of Pecking Order Theory or of the Agency Cost Theory. The empirical evidence obtained allows us to conclude that Trade-Off and Pecking Order Theories are the most theories to describe the financial behaviour of the Egyptian companies' choice of capital structure whereas there was little evidence to support the agency cost 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 Market Timing and Pecking Order Theory in Latin America

2021 ◽  
Vol 13 (2) ◽  
pp. 345-370
Author(s):  
Francisco Javier Vásquez Tejos ◽  
Hernan Pape Larre
Keyword(s):  
Capital Structure ◽  
Latin American ◽  
Market Timing ◽  
Order Theory ◽  
Annual Data ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Share Prices ◽  
Definitive Evidence ◽  
The Capital Structure

This article aims to determine if the capital structure of Latin American companies in the emerging markets of Brazil, Chile, Mexico, and Peru, are managed according to the market timing theory or the pecking order theory. The analysis was based on a non-probabilistic sample of 170 companies, with annual data, from an unbalanced panel, in the period 2010-2018. Regressions were applied with the fixed and random effects method. The results do not show significant evidence indicating that Latin American companies comply with the pecking order theory. Furthermore, there is also no definitive evidence that companies benefit from low share prices to issue capital or from debt issuance in the face of high stock market prices. There are signs that they follow a blend of several theories, which would indicate their characteristics in the capital structure of Latin American companies.

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