Capital Structure Analysis and its Impact on Firm Performance of Electronic Manufacturing Companies in India

This paper examines the statistically significant influence which capital structure has had on corporate financial performance of listed non-financial companies in East African stock markets. It used panel data of 272 observations including 34 East African non-financial listed firms listed in East African stock markets such as Dar Es Salaam Stock Market (DSE), Nairobi Securities Exchange (NSE) and Uganda Securities Exchange (USE) for a period of 8 years {i.e. 2006-2013}.Using the Panel Corrected Standard Errors (PCSEs) and Fixed Effect (FE),the study formulated two (2) econometric models with return on assets (ROA) and return on equity (ROE) as dependent variables and measures of corporate financial performance respectively, three (3) independent variables such as short term debt ratio (STDR),long term debt ratio (LTDR) and total debt ratio (TDR) as a measure of capital structure, furthermore the study used size of the firm (SIZ) as a control variable in order to control the differences in firm’s operating environment. The result indicate that capital structure has a negative and statistically significant influence on East African listed firm’s financial performance at 5% significance level. These results show that in average profitable listed firms in East African prefers to use internal source of financing in their capital structure as compared to external source of financing {like Debts-STDR,LTDR and TDR} and this results are supporting pecking order theory. Lastly the study recommends to corporate financial managers of East African non-financial listed firms should reduce financing their operations and growth by debt (STDR,LTDR and TDR) on their capital structure in order to enhance their corporate financial performance, regulatory authorities in East African region such as East African member states securities regulatory authority (EASRA) to formulate policies that will improving of financial markets in the region in order to reduce the cost of debt, further research could examine the influence {if any} of capital structure on sector wise (as per industry-like Manufacturing firms) for East African non-financial listed firms, take into account more control variables which are likely to influence financial performance such as macroeconomic variables (like gross domestic product - GDP) and consider other capital structure theories like ,market timing theory, agency theory which were not considered in our study.

This research is intended to know the influence of Debt Equity Ratio (DER), Return on Equity (ROE), Return on Asset (ROA), Earning Per Share (EPS) and Price Earning Ratio (PER) to stock price in 10 pharmaceutical industry Which are listed on the Indonesia Stock Exchange either simultaneously or partially.The result of the research yields the equation Y = 2950 + 0.275 DER + 0.167 ROE + 0.169 ROA + 0.588 EPS + 0.206 PER + e , showing the positive and significant influence of DER, ROE, ROA, EPS and PER simultaneously to stock price in 10 pharmaceutical industry Which is listed on the Indonesia Stock Exchange in 2013 - 2015. In addition, there are positive and significant influences of DER, ROE, ROA, EPS and PER partially to stock prices on 10 pharmaceutical industry companies listed on Indonesia Stock Exchange in 2013-2015. Keywords: Debt Equity Ratio (DER), Return on Equity (ROE), Return on Assets (ROA), Earning Per Share (EPS), Price Earning Ratio (PER)

Capital Structure and Firm Performance: Evidence from Malaysian Listed Companies

Background: With the transformation and upgrading of the economy, the market capitalization scale of agricultural listed companies has become larger and larger, but the problems caused by the unreasonableness of their capital structure have become increasingly prominent. This study aims at examining the relationship between capital structure and financial performance of agricultural listed companies in China.
 Methods: Secondary data are obtained from annual financial statements of the sampled firms over the period 2018-2022, and analyzed statistically using multiple regression models. The capital structure indicators refer to total debt ratio (TDR), short-term debt ratio (STDR), and long-term debt ratio (LTDR), and return on assets (ROA) and return on equity (ROE) are the performance proxies.
 Results: The results reveal that TDR and STDR have strong negative relationships with ROA and ROE, while LTDR has insignificant correlations with financial performance.
 Conclusion: The outcomes imply that agricultural companies should pay regular attention to the gearing ratio and strive to maintain good capital mix. They should depend less on short-term debt and could properly employ more of long-term debts in financing to improve profitability and promote sustainable development.

The present study aims to shed light on the impact of capital structure determinants on the financial performance of a public economic firm listed on the Algerian Stock Exchange, represented by the Saidal Group, during the period from 2010 to 2021. Furthermore, the study relied on the financial statements (balance sheet and income statement table) published on the official website of the stock exchange to collect the financial data of the firm. In pursuance of this aim, three multiple models were estimated in which dependent variables expressing financial performance were represented in each of the return on assets (ROA), return on equity (ROE), and earnings per share (EPS), while the independent variables expressing the determinants of the capital structure were represented in each of the ratio of medium and long-term debt to total assets (MLTDTA), the ratio of shortterm debt to total assets (STDTA), and the self-financing capacity (SFC). In addition to this, the control variables were used in the models to represent the liquidity and size of the firm, which was measured in the Neperian logarithm of its total assets. The study reached a set of results, the most important of which are the presence of a statistically significant positive relationship between the capital structure, as measured by the firm's self- inancing capacity, and the financial performance with its three indicators, as well as the existence of a statistically significant negative relationship between the ratio of medium- and long-term debt to total assets and financial performance. As for the ratio of short-term debt to total assets, it has a negative and statistically insignificant impact on both the return on assets and the return on equity, but also has a negative and statistically significant impact on earnings per share. In light of this, the study recommends that the firm should rely on internal financial sources rather than external financial sources to finance its various investments in order to improve its future financial performance

Big changes in North America rankings driven by M&A

This research paper investigates the determinants of capital structure within Indian FMCG companies, utilizing a representative sample of firms listed on the Bombay Stock Exchange (BSE) over a decade (2011–12 to 2020–21), sourced from the CMIE Prowess database. Employing a panel data methodology, the study evaluates indices of corporate financial leverage, including short-term debt, long-term debt, total debt, and the debt-equity ratio. The findings indicate that firm-specific variables such as size, asset tangibility, sales growth, profitability, and non-debt tax shields (NDTS) exhibit significant relationships with financial leverage in the Indian FMCG sector. Specifically, determinants of the short-term debt ratio (SDR) include firm size, age, NDTS, profitability, tangibility, and liquidity. The debt-equity ratio (DER) is significantly influenced by profitability and the effective tax rate, while total debt ratio (TDR) is associated with firm age, size, effective tax rate, asset turnover ratio, and liquidity. Additionally, long-term debt ratio (LDR) is significantly linked to firm size, asset turnover ratio, tangibility, and liquidity. The statistical analysis demonstrates that fixed effects panel regression models are the most suitable for representing SDR, LDR, TDR, and DER. Consequently, this study contributes to the existing body of knowledge on capital structure, offering empirical insights that are particularly relevant for Indian FMCG firms as they navigate financial decision-making processes informed by recent data through 2020–21.

This research aims to examine the differences of pre and post merger and acquisition on firm’s performance at Indonesia Stock Exchange. Firm performance is measured using some financial ratios, which are ROA (return on assets), ROE (return on equity), NPM (net profit margin), DR (debt ratio), EPS (earning per share), PER (price earning ratio),TATO (total asset turnover). The samples in this study were 26 manufacturing companies that were taken by purposive sampling method. The analysis used to test the hypothesis of this research is quantitative analysis with statistical methods of data normality test, Paired sample t-test and Wilcoxon signed rank test. The results from the Paired sample t-test and Wilcoxon signed rank test shows that there are no significant difference in testing 2 years before with 2 years after M&A for DR, PER, and TATO in acquiring firm, ROA, ROE, DR, EPS, PER, and TATO in acquired firm, ROA, ROE, NPM, DR, EPS, and PER in surviving firm. There are also significant difference in testing 2 years before with 2 years after for ROA, ROE, NPM, and EPS in acquiring firm, and TATO in surviving firm. These variables should be examined in a longer period of time in order to have better results.

The financing decision function of corporate finance deals with determining the best financing mix or capital structure of the firm in order to maximize the value of firm or wealth of owners. In Ethiopia, Commercial Banks use a combination of debt and equity source of finance in their capital structure. Each source of finance has its own cost of capital in the capital structure and hence effect on value of corporation. The ratio used to measure the proportion of debt to equity is considered as Financial Leverage. The main objective of this study is to investigate the effect of financial leverage on the financial performance of Ethiopian Commercial Banks for the period of 10 years (2008-2017) for the 5 selected commercial banks. As a measure of financial leverage for the independent variables three variables such as Debt ratio (DR), Debt Equity ratio (DER) and Interest coverage ratio (ICR) (times interest earned ratio) were used. As a measure of financial performance, the dependent variable two ratios such as return on asset (ROA) and return on equity (ROE) were used. The ex-post facto and longitudinal research design were used. The secondary data were collected from the audited financial reports (profit and loss statement and statement of financial position) of selected commercial banks operated in Ethiopian financial system. Descriptive statistics and Fixed Effect model were used. The result of the study showed that, Debt Ratio (DR) has a negative insignificant effect on Banks’ performance measured by Return on Assets (ROA) and Return on Equity (ROE) while Debt Equity Ratio (DER) And Interest Coverage Ratio (ICR) have significant positive Effect on Banks’ performance measured by Return on Assets (ROA) and Return on Equity (ROE).

This study investigates the firm-specific capital structure determinants for the listed firms operating in the beverage industry in Europe. The financial data related to the period 2010–2018 are obtained from Orbis. A total of 83 companies with 747 observations are used. According to the results, profitability is negatively correlated with total debt ratio, long-term debt ratio, and short-term debt ratio. Tangibility and liquidity are also negatively correlated with both total debt ratio and short-term debt ratio. Also, it is found that growth has a statistically significant negative impact on both total debt ratio and long-term debt ratio. On the other hand, the results underline that non-debt tax-shield is positively correlated with total debt ratio and short-term debt ratio. Similarly, size is positively correlated with both total debt ratio and long-term debt ratio. To sum up, growth, tangibility, liquidity, profitability, size, and non-debt tax shield have statistically significant influences on debt ratios. This study may help managers and policy makers interested in capital structure determinants to make accurate decisions. Creditors may also utilize this study to analyze the capital structure of borrowers while they are considering the issues related to lending money.

"The paper seeks to study the impact of capital structure on the profitability of the top twenty pharmaceutical companies based on market capitalization. Only companies listed on the National Stock Exchange (NSE) were selected for the analysis purposes. In this study, we collected five years (2018-2022) data for the empirical investigation using panel data regression analysis. Four dependent variables (return on equity, return on assets, earning per share, and Tobin’s Q) and three independent variables (long-term debt ratio, short-term debt ratio and total debt ratios) were selected to measure financial performance and capital structure, respectively. Size is a control variable. The results indicated that firm performance, which was measured by return on asset, return on equity, and earnings per share, has a significant negative relationship with short-term debt ratio, long-term debt ratio, and total debt ratio. Tobin’s Q showed no relationship with short-term debt and long-term debt. The paper adds to the emerging body of literature on capital structure and financial performance relationship in the Indian context using a newer data set."

The stock price is one of the benchmarks or a sign of a company's financial stability, with a stable stock price it will also make a company still trusted by the public. The purpose of this study is to explore the factors that can affect the stock price of PT Batulicin Batulicin Nusantara Maritim listed on the IDX during the 2019-2021 period, especially in financial ratios in the form of Return On Assets (ROA), Return On Equity (ROE), Earning Per Share (EPS), Book Vale per Share (BVS), Debt to Equity Ratio (DER). An associative quantitative approach and method kausal is the choice in this study, using SPSS with the Classical Assumption Test, t-test, and f-test. in the Partial T test that was carried out, each of the variables Return On Assets (ROA), Return On Equity (ROE), Earning Per Share (EPS) were effect on stock prices while book value per share (BVS), debt equity ratio (DER) has a negative effect on stock prices. Then in the Simultaneous F test shows all variables Return On Assets (ROA), Return On Equity (ROE), Earning Per Share (EPS), Book Value per Share (BVS), Debt to Equity Ratio (DER) together affect the stock price in mining company. The conclusion in this study, it is important for companies to consider many factors in maintaining stock price stability, as an effort to maintain the company's existence in maintaining public trust as users or consumers amd the benefits of this research are to increase investor awareness of activities and company insight so that they can compete to become a go public company. Keywords: ratio return on asset (ROA), return on equity (ROE), earning per share (EPS), book value per share (BVS), debt equtity ratio (DER), Stock Price

Capital structure is one of the most important issues for firms in order to achieve better financial and market performance. The main objective of this study is to examine the relationship between capital structure and firm performance. We investigate 130 manufacturing firms listed on Borsa Istanbul for the period of 2008-2013 using panel data analysis. We utilize short term debt to total asset (STDTA) and long term debt to total asset (LTDTA) as proxies of financial leverage (independent variables). Return on equity (ROE), return on asset (ROA), earnings per share (EPS) and Tobin‟s Q ratio were used as proxies of firm performance (dependent variables). Sales growth rate and firm size were used as control variables in the study. We find that STDA has a significant negative relationship with ROA, EPS and Tobin‟s Q ratio. Besides, we find that LTDTA has a significant negative relationship with ROE, EPS and Tobin‟s Q ratio, while it is positively and significantly correlated with ROA.

PurposeThe purpose of this study is to investigate whether capital structure affects accruals and real earnings management (AEM and REM) of nonfinancial firms listed on Pakistan Stock Exchange (PSX). Moreover, to investigate whether institutional development (ID) moderates the relation between capital structure and earnings management (EM).Design/methodology/approachData were taken from annual reports of nonfinancial firms listed on the PSX during 2012–2019. Data of 150 firms for a period of eight years were found completed with respect to the variables used in this study. The generalized moments of methods estimator is used to estimate the effects of explanatory variables on earning management. Furthermore, fixed and random effects methods were used to estimate the impact of capital structure on AEM and REM.FindingsResults show that all three measures of capital structure (i.e. total debt ratio, long-term debt ratio and short-term debt ratios) are inversely related to AEM. In contrast, all measures of capital structure are positively related to abnormal cash flow from operations. Total debt ratio and long-term debt ratio are negatively while short-term debt ratio is positively related to abnormal discretionary expenses. Total debt ratio and short-term debt ratio are significant and negatively related to abnormal production cost. Additionally, interaction terms of ID (i.e. rule of law and regulatory quality) significantly moderate the controlling role of debt on discretionary accruals. In sum, results show that the use of debt induces lender's monitoring. Consequently, managers move toward REM because of lower probability of being exposed.Practical implicationsFindings of this study have significant implications for managers and regulatory authorities. For instance, the use of debt increases the lender’s influence which restricts the managers to be involved in EM practices. Moreover, regulatory authorities are required to address the loopholes in regulations to refrain the managers to be engaged in EM.Originality/valueTo the best of the authors’ knowledge, this is the first study in Pakistan that has explored the impact of capital structure on AEM and REM. More importantly, a careful review of the literature affirms that this study is among the few studies that have used ID as a moderating variable to explain the relation between capital structure and EM.

Using a case study of the Food and Beverage industry listed on the Indonesia Stock Exchange (IDX) between 2017 and 2022, this study seeks to examine the partial impact of financial performance on stock prices through Earnings Per Share (EPS). Ratios like Return on Assets (ROA), Return on Equity (ROE), EPS, and share prices are used to gauge financial performance. Using a saturated sampling method, 18 firms were chosen for the sample. Using a quantitative technique with a descriptive approach, this study performs data analysis using Structural Equation Modeling (SEM) with the aid of SmartPLS version 3. 0. According to the study's findings, ROA has a considerable impact on EPS but not on share values. ROE has no discernible impact on stock prices or EPS. Nevertheless, EPS is shown to be a mediating variable between ROA and ROE, both of which have a substantial impact on share values. Improving the efficiency and effectiveness of financial management is one of the recommendations, particularly in areas that have an impact on EPS, such as capital structure and profitability. When making investment decisions, investors should pay attention to financial performance metrics like stock values, EPS, ROA, and ROE. To gain a more thorough analysis, future academics are urged to consider more variables, such the Price to Earnings Ratio, Dividend Payout Ratio, and external elements such as inflation and interest rates.