scholarly journals What drives the capital structure? The case of non-life insurance companies in Serbia

Industrija ◽  
2021 ◽  
Vol 49 (1) ◽  
pp. 25-41
Author(s):  
Miloš Božović ◽  
Marija Koprivica
Keyword(s):  
Capital Structure ◽  
Fixed Effects ◽  
Order Theory ◽  
Negative Influence ◽  
Positive Influence ◽  
Insurance Companies ◽  
Fixed Effects Model ◽  
Firm Level ◽  
Pecking Order Theory ◽  
The Capital Structure

This paper studies the factors behind the capital structure of insurance companies. We used financial reports of non-life and composite insurance companies in Serbia between 2006 and 2019. In particular, we apply a panel-data approach to examine the relationship between leverage, defined as the ratio of technical reserves to capital and various firm-level characteristics. The coefficients estimated using the individual fixed-effects model indicate a significant and negative influence of profitability, growth and liquidity measures on leverage and a significant and positive influence of company size. The results indicate that the tradeoff theory and the pecking order theory are relevant in explaining the non-life insurer capital structure in Serbia.

scholarly journals Pengaruh Tangibility, Growth Opportunity, Size, Profitability, dan Risk Terhadap Struktur Modal: dalam Perspektif Pecking Order Theory pada Perusahaan Automotive and Allied Products di BEI

2018 ◽  
Vol 5 (1) ◽  
pp. 44
Author(s):  
DEVI WAHYU NUARSARI
Keyword(s):  
Capital Structure ◽  
Capital Market ◽  
Order Theory ◽  
Negative Influence ◽  
Positive Influence ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Growth Opportunity ◽  
The Capital Structure

This research aims to test influence of tangibility, growth opportuity, size, profitability, and risk on the capital structure. This research is conducted on Automotive and Allied Products companies at BEI period 2004-2009, that still listed in the Indonesian Capital Market. The result of the test concluded that tangibility and size has a positive influence to the capital  structure, but profitability dan risk has a negative influence to the capital structure, and growth opportunity has a negative influence to the capital structure but not significant.

scholarly journals PENGUJIAN PECKING ORDER THEORY PADA STRUKTUR MODAL PERUSAHAAN ASURANSI YANG TERDAFTAR DI BURSA EFEK INDONESIA (BEI)

2019 ◽  
Vol 17 (2) ◽  
Author(s):  
Isti Fadah
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Order Theory ◽  
Insurance Companies ◽  
Business Risk ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Financing Pattern ◽  
The Capital Structure

This study aims to analyze the effect of profitability, asset structure, and business risk on the capital structure of insurance companies listed in Indonesia Stock Exchange (BEI) in 2012-2016 and to know the pattern of financing pecking order theory applied to insurance companies listed in the Stock Exchange Indonesia (BEI) for 2012-2016. This research is explanatory research. The population in this study are all insurance companies listed on the Indonesia Stock Exchange (BEI) in 2012-2016 amounting to 12 companies and samples used in this study as many as 10 companies. The analysis method used is multiple linear regression analysis with t test. The results showed that profitability does not affect the capital structure of insurance companies, asset structure and business risk significantly influence the capital structure of insurance companies listed on the Indonesia Stock Exchange (BEI) in 2012-2016. While on pecking order theory testing, there are 3 (three) insurance companies that tend to follow the pecking order theory financing pattern and 7 (seven) companies do not follow the pecking order theory financing pattern.

scholarly journals The Determinants of Capital Structure: Evidence from Selected Listed Companies in Sri Lanka

2016 ◽  
Vol 8 (2) ◽  
pp. 94 ◽  
Author(s):  
Tharmalingam Pratheepan ◽  
Y. K. Weerakon Banda
Keyword(s):  
Sri Lanka ◽  
Capital Structure ◽  
Fixed Effects ◽  
Panel Data Analysis ◽  
Listed Companies ◽  
Order Theory ◽  
Positive Sign ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
The Capital Structure

This research examines the determinants of capital structure of selected listed companies in Sri Lanka. The capital structure of 55 companies listed in Colombo Stock Exchange (CSE) is empirically examined using the fixed effects model. Based on the findings of the panel data analysis during the period of 2003-2012, Profitability exhibits statistically significant of inverse relationship with leverage while firm size and growth shows statistically significant of positive relationship with leverage for selected listed companies in Sri Lanka. Non–debt tax shields and tangibility indicate insignificant impacts on leverage. The results of this empirical study shows that there is robust evidence to support the pecking order theory by manufacturing based companies on the capital structure determinant of profitability variable, and growth variable also strongly supports to the association of the pecking order theory. Though, trade–off theory also can not be rejected because of the correct estimate of the positive sign of size variable of manufacturing based companies. Thus, implication of pecking order theory is more appropriate in Sri Lankan perspective.

Capital Structure and Debt Maturity in Nonprofit Organizations

2021 ◽  
pp. 089976402110655
Author(s):  
Inigo Garcia-Rodriguez ◽  
M. Elena Romero-Merino ◽  
Marcos Santamaria-Mariscal
Keyword(s):  
Capital Structure ◽  
Nonprofit Organizations ◽  
Fixed Effects ◽  
Order Theory ◽  
Debt Maturity ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Financing Decisions ◽  
Tangible Assets ◽  
The Capital Structure

This article examines the capital structure and debt maturity in nonprofit organizations (NPOs). In particular, we analyze whether these financing decisions are made as expected according to the two main theories used to explain the capital structure, that is, the trade-off and pecking order theories. To do so, we study the associations between NPOs’ indebtedness and their size, age, tangibility, liquidity, profitability, risk, and growth. We use fixed effects, probit, and Heckman selection models with unbalanced panel data containing 8,721 charities in the United Kingdom for the period 2011–2018 (60,222 year-obs). Our results show that the financing patterns of NPOs are consistent with the arguments of the pecking order theory. We also find that less than half of our sample uses long-term debt. Moreover, debt maturity is longer in larger NPOs, those with more tangible assets, or those with higher liquidity.

scholarly journals Testing the pecking order theory of capital structure: the case of Islamic financing modes

2020 ◽  
Vol 6 (1) ◽  
Author(s):  
Moncef Guizani
Keyword(s):  
Capital Structure ◽  
Random Effect ◽  
Order Theory ◽  
Equity Financing ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Financing ◽  
Financing Decisions ◽  
Executive Managers ◽  
The Capital Structure

AbstractThe purpose of this paper is to examine whether or not the basic premises according to the pecking order theory provide an explanation for the capital structure mix of firms operating under Islamic principles. Pooled OLS and random effect regressions were performed to test the pecking order theory applying data from a sample of 66 Islamic firms listed on Kingdom of Saudi Arabia stock market over the period 2006–2016. The results show that sale-based instruments (Murabahah, Ijara) track the financial deficit quite closely followed by equity financing and as the last alternative to finance deficit, Islamic firms issue Sukuk. In the crisis period, these firms seem more reliant on equity, then on sale-based instrument and on Sukuk as last option. The study findings also indicate that the cumulative financing deficit does not wipe out the effects of conventional variables, although it is empirically significant. This provides no support for the pecking order theory attempted by Saudi Islamic firms. This research highlights the capital structure choice of firms operating under Islamic principles. It explores the implication of the relevant Islamic principles on corporate financing preferences. It can serve firm executive managers in their financing decisions to add value to the companies.

scholarly journals Determinants of the Capital Structure of Companies Listed on the Stock Exchanges of Argentina, Brazil and Chile: An Empirical Analysis of the Period from 2007 to 2016

2020 ◽  
Vol 12 (6) ◽  
pp. 18
Author(s):  
Marcelo Rabelo Henrique ◽  
Sandro Braz Silva ◽  
Antônio Saporito ◽  
Sérgio Roberto da Silva
Keyword(s):  
Panel Data ◽  
Capital Structure ◽  
Order Theory ◽  
Future Research ◽  
Stock Exchanges ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Speed Of Adjustment ◽  
Asset Growth ◽  
The Capital Structure

The present investigation refers to the determinants of the capital structure, using the technique of multiple regression through Panel Data of open capital companies in the stock exchanges of Argentina, Brazil and Chile, in order to know the behavior of determinants of the capital structure in relation to Trade-Off Theory (TOT) and Pecking Order Theory (POT). The POT offers the existence of a hierarchy in the use of sources of resources, while the TOT considers the existence of a target capital structure that would be pursued by the company. Sixteen accounting variables were used, in which five are dependent (related to indebtedness) and eleven are independent variables (explaining the determinants of the capital structure). It is observed that, with the use of the Panel Data, the determinants that seem to influence in a more accentuated way the levels of debt of the companies are: current liquidity, tangibility, return to shareholders, return of assets, sales growth, asset growth, market-to-book and business risk measured by the volatility of benefits. Suggestions for future research include the use of Panel Data to analyze other factors that may influence indebtedness, mainly taxes and dividends, as well as a deeper analysis of factors that may influence the speed of adjustment towards the supposed objective level.

scholarly journals The choice of the capital structure of the company according to the framework of theories of capital structure

2015 ◽  
Vol 4 ◽  
pp. 22-27
Author(s):  
Mitenkova E.N.
Keyword(s):  
Capital Structure ◽  
System Analysis ◽  
Credit Rating ◽  
Developed Countries ◽  
Order Theory ◽  
Share Price ◽  
Actual Problem ◽  
Pecking Order Theory ◽  
Tax Shield ◽  
The Capital Structure

This article deals with the actual problem of choosing capital structure of a company, because debt ratio has an influence on making strategic decisions of the long-term company’s development, its investment risks, potential interest conflicts between management, owners and lenders. The article analyzes the principles of the construction of capital structure in terms of classical and modern theories of capital structure using methods of scientific knowledge: system analysis, synthesis, logical analysis, empirical researches. According to the first theory of the capital structure, developed by M. Miller and F. Modigliani through a number of strict preconditions, capital structure does not affect the company’s value. By adding a tax factor authors showed that in this case the choice of capital structure affects the company’s value, because debt capital increases it by the value of the tax shield. According to trade-off theory the main determinants of capital structure are the size of the tax shield, the probability of bankruptcy and the credit rating. According to the theory of the signal the capital structure depends on such factors as the information asymmetry and the credit rating. According to the pecking order theory capital structure the choice of it is determined by the hierarchy of sources of financing: firstly companies prefer to use internal sources of financing, then - debt financing. According to the market timing theory the key factors of capital structure are share price fluctuations. Analysis of various theories of the capital structure has showed that most theories have been developed by economists represented countries with developed markets. But developed countries and emerging countries have a lot of differences, which have an impact on choosing capital structure by companies.

scholarly journals Capital structure determinants of hospitality sector SMEs

2016 ◽  
Vol 23 (1) ◽  
pp. 113-132 ◽  
Author(s):  
Luís Pacheco ◽  
Fernando Tavares
Keyword(s):  
Capital Structure ◽  
Small And Medium Enterprises ◽  
Order Theory ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Trade Off ◽  
Factors Affecting ◽  
Portuguese Economy ◽  
Hospitality Sector ◽  
The Capital Structure

The main objective of this article is to study the capital structure determinants of small and medium enterprises (SMEs) in the hospitality sector and how this can influence their level of indebtedness. Using panel data methodology and considering a sample of 43 Portuguese hotels, the authors study the capital structure determinants between 2004 and 2013. The study examines the indebtedness level in light of the two main theories – the Trade-off theory and the Pecking Order theory. The hospitality sector was chosen because of its importance in the Portuguese economy and because this particular sector has hardly been studied. In addition to total indebtedness, the authors extend the literature by analysing the differences between short-term and long-term indebtedness. The results obtained suggest that profitability, assets tangibility, firm dimension, total liquidity and risk are key factors affecting the capital structure of hospitality sector SMEs, while growth, other tax benefits and age were not deemed relevant. These results allow us to conclude that Trade-off and Pecking Order theories should not be considered in isolation to explain the capital structure of hospitality sector SMEs.

scholarly journals Capital structure, stock exchanges in Chile: 2007 to 2016

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Marcelo Rabelo Henrique ◽  
Sandro Braz Silva ◽  
Antonio Saporito
Keyword(s):  
Capital Structure ◽  
Pearson Correlation ◽  
Descriptive Analysis ◽  
Explanatory Power ◽  
Order Theory ◽  
Future Research ◽  
Pecking Order Theory ◽  
Content Type ◽  
The Capital Structure

PurposeThe article consists of analyzing the behavior of the determinants of the capital structure of Chilean companies between 2007 and 2016. The objective of this study was achieved through a typology of research based on bibliographic, documentary, exploratory and explanatory, considering annual financial reports from Economática in the chosen period.Design/methodology/approachAs this is a research study with a quantitative approach, the statistical tools used were descriptive analysis, Pearson correlation, variance inflation factor (VIF) and panel regression.FindingsThe results show that Chilean companies (240) have higher and costly long-term debt. These companies have high averages in current liquidity, return to shareholders, growth in sales and assets and market-to-book (MTB). Long-term debt was highlighted with an explanatory power of 85%. Current liquidity was highlighted as being significant in most of the indebtedness proposed in the survey, failing to register brands like this in expensive short-term and long-term indebtedness. It is noticed that flip flops companies are more prone to the pecking order theory (POT). The gap occupied by this study is linked to research involving South American countries, especially the Chilean market, and the determinants of the capital structure.Originality/valueAs future research, it is suggested to include other types of variables related to indebtedness and the same action for its determinants, in addition to the speed technique of adjusting corporate debts.

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.

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