scholarly journals Effect of Corporate Financial Leverage on Financial Performance: A Study on Publicly Traded Manufacturing Companies in Bangladesh

2018 ◽  
Vol 14 (12) ◽  
pp. 124 ◽  
Author(s):  
Ripon Kumar Dey ◽  
Syed Zabid Hossain ◽  
Rashidah Abdul Rahman
Keyword(s):  
Financial Performance ◽  
Empirical Studies ◽  
Order Theory ◽  
Manufacturing Companies ◽  
Financial Leverage ◽  
Publicly Traded ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Debt Capital ◽  
Equity Ratio

The study strives to examine the effect of financial leverage on financial performance in a developing country context using two OLS regression models based on panel data consisting of 816 cases (48 companies x 17 years). Financial performance is measured using ROA, ROE, EPS, and Tobin’s Q, and financial leverage is measured using the debt-assets ratio and debt-equity ratio. It is observed that ROA and Tobin’s Q are negatively correlated with financial leverage, which is in line with the assumptions of the pecking order theory, market timing theory, and many empirical studies. However, financial leverage has a positive effect on ROE and no effect on EPS. These results are also consistent with the MM theorem, static trade off theory and many other empirical studies. Yet again, the two OLS models have put forward conflicting results while taking EPS as the dependent variable. The results corroborate the inefficient use of debt capital and suggest the need to improve the reliability of accounting information.

scholarly journals KINERJA KEUANGAN, KINERJA SAHAM DAN STRUKTUR MODAL DI INDONESIA

2018 ◽  
Vol 18 (2) ◽  
pp. 135
Author(s):  
Nera Marinda Machdar
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Stock Exchange ◽  
Order Theory ◽  
Analysis Method ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Stock Performance ◽  
Observation Period

<p><em>This study addresses the role of the company's financial performance on the company's stock performance, and investigates the role of capital structure as a moderating variable to weaken the effect of the company's financial performance on the company's stock performance. This research uses agency theory and pecking order theory. Panel regression analysis method is used for the data analysis. The data used as the sample of the company is the properti and real estat firms listed in Indonesia Stock Exchange, and the observation period is the year 2011-2016. The number of samples by using purposive samping criteria is available 234 firms-year. The findings of this study is that the company's financial performance has no effect on the company's stock performance, and capital structure can not moderate the effect of the company's financial performance on the company's stock performance.</em></p>

scholarly journals Financial frictions and substitution between internal and external funds in publicly traded Brazilian companies

2012 ◽  
Vol 23 (58) ◽  
pp. 19-32 ◽  
Author(s):  
Márcio Telles Portal ◽  
João Zani ◽  
Carlos Eduardo Schönerwald da Silva
Keyword(s):  
Cash Flow ◽  
Financial Frictions ◽  
Negative Relationship ◽  
Investment Decisions ◽  
Order Theory ◽  
Publicly Traded ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Internal Funds ◽  
External Funds

The present study aimed to document the effects of financial constraints on the negative relationship between cash flow and external funds, a phenomenon associated with the Pecking Order Theory. This theory suggests that companies subject to more expensive external funds (financially constrained firms) should demonstrate a stronger negative relationship with cash flow than companies subject to minor financial frictions (financially unconstrained firms). The results indicate that the external funds of constrained firms consistently present less negative sensitivity to cash flow compared with those of unconstrained companies. Additionally, the internal funds of constrained companies demonstrate a positive sensitivity to cash flow, whereas those of unconstrained companies do not show any such significant behavior. These results are in accordance with the findings of Almeida and Campello (2010), who suggest the following: first, because of the endogenous nature of investment decisions in constrained companies, the complementary relationship between internal and external funds prevails over the substitutive effects suggested by the Pecking Order Theory; and second, the negative relationship between cash flow and external funds cannot be interpreted as evidence of costly external funds and therefore does not corroborate the Pecking Order 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 Determinants Of Financial Leverage Of SMEs In Mauritius

2011 ◽  
Vol 10 (3) ◽  
pp. 113 ◽  
Author(s):  
M.P. Odit ◽  
Y.D. Gobardhun
Keyword(s):  
Panel Data ◽  
Capital Structure ◽  
Small And Medium Enterprises ◽  
National Income ◽  
Order Theory ◽  
Financial Leverage ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Flow Problems ◽  
Medium Enterprises

The key aim of this paper is to test the relevance of the different financing theories for explaining capital structure choice in the Small and Medium Enterprises (SMEs) sector in Mauritius. One of the areas of financial theory that has worried much of academicians and professionals is debt policy decisions in firms due to the limited study in this field. Three of the most relevant theories of capital structure are explored, namely the Trade Off Theory, the Agency Theory and the Pecking Order Theory (POH). Hence, in order to shed more light over this issue, an empirical analysis has been carried out over a panel data sample of 25 firms of SMEs for the period 2002-2008, using quantitative analysis. The panel data methodology is used to test empirical hypotheses and controls for firm heteroskecedasticity and corrects for autocorrelation among the variables that are involved. The findings show that some theories are not in line as such with the results obtained from the analysis as the POH. However, some of the Capital Structure Theories are considered important in determining financial leverage of SMEs in Mauritius like agency costs involved, information asymmetry problems, liquidity and cash flow problems. The main implication of this study is to understand the position of SME in Mauritius in terms of their debt and its importance and contribution to the National Income.

scholarly journals Determinan Struktur Modal Dalam Perspektif Pecking Order Theory Dan Agency Theory

Akuntabilitas ◽  
2020 ◽  
Vol 13 (2) ◽  
pp. 191-204
Author(s):  
Nana Umdiana ◽  
Shifa Tivana
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Managerial Ownership ◽  
Manufacturing Companies ◽  
Business Risk ◽  
Pecking Order ◽  
Good Industry ◽  
Pecking Order Theory ◽  
Growth Opportunity ◽  
The Capital Structure

The capital structure seen from the perspective of pecking order theory explains that companies are more likely to prefer internal funding than external companies. Pecking Order Theory explains why highly profitable companies generally have less debt. This study aims to discuss Liquidity, Asset Structure, Business Risk, Growth Opportunity, Managerial Ownership of Capital Structures on Manufacturing Companies of the basic Consumer Good Industry Sector listed on the Indonesia Stock Exchange period 2016- 2019.This type of research is an associative causal research with the type of time series. The sample was selected using the purposive sampling method. Data analyzed amounted to 40. Data was tested using multiple linear regression analysis.The result of this study indicate that Liquidity is significant affect the Capital Structure. Asset Structure, Business Risk, Growth Opportunity, Managerial Ownership did not affect the Capital Structures.

scholarly journals Penerapan Pecking Order Theory dan Kaitannya dengan Pemilihan Struktur Modal Perusahaan pada Sektor Manufaktur di Negara Indonesia dan Negara Australia

2014 ◽  
Vol 1 (3) ◽  
pp. 451-468
Author(s):  
Iryuvita Januarizka Putri Radjamin ◽  
I Made Sudana
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
External Financing ◽  
Manufacturing Companies ◽  
Analysis Model ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Significant Difference ◽  
Manufacturing Company ◽  
The Difference

This study aimed to determine first , the difference between the capital structures in Indonesian manufacturing company with in Australia , and secondly to determine whether manufacturing companies in Indonesia and Australia applying the packing order theory in determining the capital structure . The analysis model used is the comparative analysis between the two groups of independent samples to determine differences in capital structure manufacturing company in Indonesia with a capital structure of manufacturing companies in Australia. Meanwhile, to determine whether manufacturing companies in Indonesia and Australian applying packing order theory, used Shyam - Sunder and Meyers models . The study was conducted on 42 Australian manufacturing companies and 33 manufacturing companies in Indonesia, which is selected by purposive random sampling over the period 2006-20010. The results showed a significant difference between capital structure manufacturing companies in Indonesia and in Australia. Manufacturing companies in Indonesia using long-term debt is relatively higher compared to manufacturing companies in Australia. In addition, it was also found that in determining capital structure manufacturing companies in Indonesia to implement packing order theory, while manufacturing companies in Australia are not . Keywords : Capital Structure, Deficit External Financing, Pecking Order Theory

scholarly journals Influência da estrutura de capital no desempenho econômico de empresas familiares e não familiares brasileiras

2021 ◽  
Vol 14 (1) ◽  
pp. 162-181
Author(s):  
Edgar Pamplona ◽  
Tarcísio Pedro da Silva ◽  
Wilson Toshiro Nakamura
Keyword(s):  
Order Theory ◽  
Family Businesses ◽  
Debt Ratio ◽  
Publicly Traded ◽  
Short Term ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Accounting Data ◽  
Publicly Traded Companies

Purpose – This research aims to verify the influence of the capital structure on the economic performance of the Brazilian family and non-family businesses.Design/methodology/approach – The research is characterized as descriptive, documentary, and quantitative, being the accounting data under analysis extracted from the Economatica® database. The sample is composed of 117 publicly traded companies listed in B3, being 68 family and 49 non-family with an analysis period from 2011 to 2015. To reach the objective, statistical techniques were used, with emphasis on multiple linear regression models.Findings – The results point out that the Short-term Debt Ratio (SDR) and Long-term Debt Ratio (LDR) negatively influence the performance of family businesses, while SDR and LDR have a negative and positive relationship, respectively, with the performance of the non-family business. Originality/value – In short, such results demonstrate that family businesses must follow the pecking-order theory prerogatives to maximize their performance, while managers of non-family organizations need to observe the assumptions of both theories – trade-off and pecking-order – according to the type of indebtedness (short or long term).

scholarly journals The Relationship between Capital Structure and Financial Performance of the Company

2021 ◽  
Vol 91 ◽  
pp. 01002
Author(s):  
V.V. Tretiakova ◽  
M.S. Shalneva ◽  
A.S. Lvov
Keyword(s):  
Pharmaceutical Industry ◽  
Capital Structure ◽  
Financial Performance ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Market Capitalization ◽  
Negative Effect ◽  
The Impact ◽  
The Relationship

The article examines and analyzes the relationship of key performance indicators (ROA, ROIC, change in market capitalization and price-to-book ratio) and the capital structure of the company based on the pharmaceutical industry in the UK for the 2009-2019 period. The study seeks to provide a practical evidence on the impact of external financing on company’s financial performance and test applicability of the pecking order theory for the chosen companies. The research conducted uses panel data regression and Wald test to determine and analyze the effect of capital structure on the financial indicators of the company performance. The study used a sample of 185 UK companies from the pharmaceutical industry. The result of the research showed that equity has negative effect on price-to-book ratio and ROA and positive effect on change in market capitalization, while long-term debt has a positive relationship with price- to-book ratio and change in market capitalization. In addition, short-term debt has a negative effect on change in market capitalization, ROA and ROIC. The study also provides only partly coincidence of the results with the pecking order theory.

scholarly journals INTERDEPENDENSI KEBIJAKAN DEVIDEN, FINANCIAL LEVERAGE DAN INVESTASI: PENGUJIAN PECKING ORDER THEORY

2009 ◽  
Vol 8 (1) ◽  
Author(s):  
Nency Liono ◽  
Mudji Utami ◽  
Liliana Inggrit Wijaya
Keyword(s):  
Dividend Policy ◽  
Stock Exchange ◽  
Order Theory ◽  
Financial Leverage ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Beverage Industry ◽  
Food And Beverage Industry ◽  
Food And Beverage ◽  
Financial Decision

The aims of this research to find interdependency relationships among dividend policy, financial leverage, and investment based on pecking order theory testing. Research object includes food and beverages industry which listing in Indonesian Stock Exchange 2002-2007. Given the influence among third the variable hence will know what is there are interdependency among third the variable and what its influence to company in period food and beverage industry 2002-2007 related to company financial decision. Result of this research shows there is interdependency among dividend policy, financial leverage and investment but not support pecking order theory.

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