Determinants Of Capital Structure Research Articles

Capital Structure Determinants of Public Infrastructure Companies in Indonesia

Capital Structure Determinants of Public Infrastructure Companies in Indonesia

Study on Determinants of Capital Structure in the Pharmaceutical Industry of Pakistan

This research on the determinant of capital structure is limited to pharmaceutical companies listed on Pakistan Stock Exchange (PSX). Several researchers both in developed and developing countries have attempted to identify determinant of capital structure for different industries in their economies. The results for various explanatory variables used by researchers have been somewhat mixed. Some of the variable which were found significant in explaining the capital structure in one study remained insignificant in the other studies. This empirical study makes an attempt to explore the determinants of capital structure in the pharmaceutical firms quoted on PSX (Pakistan Stock Exchange). This study coversa ten years period from 2012 to 2021( both inclusive) for seven companies using eleven explanatory variables for leverage. There are twelve companies listed on PSX, seven of these twelve quoted companies on the basis of availability of data for all 10 years have been selected. The results of the study indicate, operating leverage, firm’s specialty, return on asset and tax rate were significant determinants of capital structure. It was also observed that the size of the firm, growth rate, basic earning power, fixed charges coverage ratio, non-debt tax shield, dividend payout ratio and liquidity have a minor (insignificant) influence on the capital structure of the pharmaceutical companies in Pakistan.

Capital Structure Theory: Past, Present, Future

The purpose of this review is to analyze all existing theories of the capital structure (with their advantages and disadvantages) in order to understand all aspects of the problem and make correct management decisions in practice. The role of the capital structure is that the correct determination of the optimal capital structure allows the company’s management to maximize the capitalization of the company and the long-term goal of the function of any company. The review examines the state of the capital structure and capital cost theory from the middle of the last century, when the first quantitative theory was created, to the present. The two main theories, Modigliani–Miller (MM) and Brusov–Filatova–Orekhova (BFO), are discussed and analyzed, as well as their numerous modifications and generalizations. Additionally, discussed is the latest stage in the development of the theory of capital structure, which began a couple of years ago and is associated with the adaptation of the two main theories of capital structure (Brusov–Filatova–Orekhova and Modigliani–Miller) to establish the practice of the function of companies. This generalization takes into account the real conditions of the work of the companies. It was noted that taking into account some effects that are present in economic practice (such as variable income, frequent payments of tax on income, advance payments of tax on income, etc.) brings both theories closer, and even the Modigliani–Miller theory, with all its many limitations, becomes more applicable in economic practice. However, it should be remembered that the Modigliani–Miller theory is only true for perpetual companies, while the BFO theory is valid for companies of any age, and from this point of view, they never coincide.

Discovering Capital Structure Determinants for SAARC Energy Firms

Energy scarcity is the core drain for the South Asian economies. However, there is a lack of studies in relation to the capital structure determinants in the context of South Asian Association for Regional Cooperation (SAARC). Thus, this study is an attempt to explore the capital structure determinants of energy sector firms which are operating in the four large economies of the SAARC region that are Pakistan, India, Bangladesh and Sri Lanka. In this context, a total of 34 energy sector firms’ Panel Data is entailed over the period of 2007-2020. The six key capital structure determinants, namely asset tangibility, current ratio, return on equity, non-debt tax shield, annual gross domestic product are examined in relation to debt to total asset ratio. Deploying Panel Data Static models and Dynamic model via Generalized Method of Moments (GMM), the outcomes reveal that asset tangibility and current ratio are the most prominent determinants among all others. The significant role of profitability and tangibility through different estimators directly infers the relevance of Dynamic Trade-Off theory. The findings provide new ways for policy makers to construct parallel strategies which not only help out in overcoming the energy scarcity issues but also enhance regional level integration.

Capital Structure Determinants: New Evidence from the MENA Region Countries

The objective of this paper is to investigate empirically the determinants of capital structure for a sample of 1101 firms from 11 MENA region countries over the period 2003-2017. Using a comparative approach, we find that firm-specific determinants explain better differences in capital structure choices than other country-specific determinants. Comparisons between countries, sub-regions (GGC and non-GCC countries) and legal origin (Common and Civil law countries) show furthermore that there are differences in terms of significance and importance of capital structure determinants. The most important determinant in the MENA region is profitability. The firm’s capital structure is positively impacted by size, tangibility of assets and private credit and it is negatively impacted by profitability, growth opportunities, GDP growth rate and stock market capitalization as a proportion of GDP. Moreover, we find that total leverage ratio, expressed in market values, give better results than leverage ratio expressed in book values and long-term leverage ratios expressed in book and/or market values. Finally, there is some evidence that the “Jasmine Revolution” has had an impact on firms’ capital structure determinants. Specific-level determinants play a much more prominent role after the revolution than in the past.

Impact of Paris Agreement on financing strategy: Evidence from global FPSO industry

This study explores the impact of the Paris Agreement on the determinants of firm-level capital structure decisions of listed contractor-owned Floating Production Storage and Offloading (FPSO) companies in the oil and gas (O&G) industry from 2000 to 2019. The study identified various financing structures between contractor-owned FPSO companies due to their individual and institutional characteristics. Tangibility, profitability, market-to-book (growth), size and effective tax rates are critical determinants of capital structure. Overall, the results support applying the pecking-order theory (PoT) from a firm-level and macro-economic context. The 2015 Paris Agreement ratification significantly impacted the capital structure determinants; the dynamic association has changed in the post-Paris period. Besides, the impact of the global financial crisis on leverage ratios was potentially mitigated by the upward trend in Brent crude oil price between 2007 and 2013.

Determinants of capital structure with reference to paper industry: An explanatory analysis

Capital structure is the combination or proportion of various sources. An organization can procure funds by issuing equity shares, preference shares and debentures to the public. Apart from this, they may also borrow from the banks or financial institutions. These are the various sources available for a concern for procuring or mobilizing the capital. Whether capital is needed initially or additional fund needed for the smooth function there are various sources available for mobilizing the capital or fund. While designing the financial or capital structure manager has to consider the overall cost which will incur after constructing the capital structure. Paper industry is selected for the research. Five companies listed in the Bombay Stock Exchange were selected for the study. An attempt has been made to study the components of capital structure of paper industry.

Capital Structure Determinants of Indian Small and Medium Auto Component Enterprises- Justifying theories of Capital Structure.

Capital Structure Determinants of Indian Small and Medium Auto Component Enterprises- Justifying theories of Capital Structure.

Determinants of Capital Structure: Property and Real Estate Companies (IDX)

The main purpose of this research is to test and analyze the impact of return on assets (ROA), firm size, tangibility, risk, and sale growth on capital structure. In this research, 8 property and real estate companies were used as samples listed on the Indonesia Stock Exchange with a total 9 years raging from the period of 2012 – 2020. The sample was selected based on purposive sampling technique. The data analysis method that were used in this research is descriptive statistics, panel data analysis model, data quality test, classic assumption tests, multiple linear regression, coefficient of correlation, coefficient of determination, goodness-of-fit test, and hypothesis test. The results of this research show that tangibility has a negative impact on capital structure. Whereas for return on assets (ROA), firm size, risk, and sale growth has no impact on capital structure.

Determinants of Capital Structure: Empirical Evidence of Manufacturing Companies in the Republic of Serbia

The subject of research in the paper is the capital structure of companies in the Republic of Serbia. The research sample consists of companies that operated in the manufacturing industry in the Republic of Serbia in the period 2006–2020. The aim of the research is to identify firm-specific variables that have significant influence on the capital structure of the analyzed companies. Using a panel data methodology, three leverage models were estimated: long-term leverage, short-term leverage, and total leverage. The research results confirm the importance of company size, profitability, tangibility, and risk in determining the capital structure of companies in the Republic of Serbia. However, the research results show that size, profitability, and tangibility of assets have the opposite effect on long-term leverage compared to short-term and total leverage. That is, the behavior of companies in the Republic of Serbia in the case of long-term leverage is in accordance with the predictions of the trade-off theory, while in the case of short-term and total leverage, the behavior of companies can be explained by the pecking order theory.

Determinants of Capital Structure: Evidence from the Banking Sector

The main objective of this research is to investigate the capital structure determinants of Pakistani banks working at national and international levels. The purpose was to explore which variables influence the capital structure more. Data was gathered from the published report of the State Bank of Pakistan (SBP) and Pakistan Stock Exchange (PSX) website from the period 2010-2019 year. Twenty-four bank reports were compiled and analyzed who work at national and international levels. Eviews software was used to analyze the data in which descriptive, covariance correlation, and regression analysis were carried through by Ordinary Least Square (OLS) method. The results show that all five independent variables have a negative relationship except firm size on leverage which could be due to the firms' nature of business. This research concluded that ROA has a substantial negative impact on leverage; as ROA increase, it will reduce the leverage. TGB has a moderate negative, and GTH and INF have a weak negative on leverage, meaning TGB, GTH, and INF increases will reduce the leverage. SZ has a weak positive impact on leverage means Size will impact positively as size increases, and it will also increase leverage.

Determinants of Capital Structure in Non-Financial Companies

The purpose of this study is to determine whether company profitability, company size, growth rate and company asset structure affect the capital structure decisions of non-financial public companies included in the Kompas 100 index. The research method uses quantitative methods with descriptive statistical approaches and inferential statistics through regression analysis techniques. panel data. The results show that the effect of profitability, firm size, growth, and firm asset structure together on the capital structure of non-financial public companies listed in the Kompas 100 Index is positive and significant

The Determinants of Capital Structure of Stock Exchange-listed Non-financial Firms in Pakistan

Capital structure refers to the different options used by a firm in financing its assets. Generally, a firm can go for different levels/mixes of debts, equity, or other financial arrangements. It can combine bonds, TFCs, lease financing, bank loans or many other options with equity in an overall attempt to boost the market value of the firm. In their attempt to maximise the overall value, firms differ with respect to capital structures. This has given birth to different capital structure theories that attempt to explain the variation in capital structures of firms over time or across regions. On the other hand, empirical evidence is also not sometime consistent in substantiating a particular capital structure theory.

Determinants Capital Structure of Small and Medium Enterprises in Indonesia

This research aims to analyze the determinants of capital structure. The independent variables in this study are corporate taxes, company size, tangible assets, corporate risk, profitability, non-debt tax protection, and liquidity. While the dependent variable is short-term debt, long-term debt, and total debt. The sample of this study uses 61 Small and Medium Enterprises companies listed on the Pefindo Index for the period of 2019-2021. The sampling technique uses purposive sampling and the analysis method uses panel data regression. The results explained that corporate taxes, tangible assets, and non-debt tax shields do not affect capital structure. Company size does not affect short-term debt and total debt. However, it has a significant negative effect on long-term debt. Company risk and liquidity significantly negatively affect short-term debt and total debt. However, it does not affect long-term debt. Profitability has a significant positive effect on short-term debt and a significant negative effect on long-term debt. The implication of the research that has been done is to provide direction for financial managers regarding the optimal use of capital structure to achieve the company's goal of increasing the welfare of shareholders. As for investors, investors should choose companies that have high company size, low risk, and high liquidity.

Determinants of Capital Structure: An Expanded Assessment

AbstractUsing a standardized methodology, we empirically evaluate 55 proposed determinants of capital structure in terms of statistical significance, economic significance, and identification. We find that robust and economically important determinants of debt ratios are relatively few in number. Nevertheless, because each determinant relates to one of five market imperfections—taxes, distress costs, information asymmetry, agency costs, or supply frictions—we draw conclusions from the evidence as a whole regarding the explanatory power of different capital structure theories. We find greater support for pecking order theory and supply-related theories, with less support for traditional tradeoff theory and agency theory.

Does corporate social responsibility pay? Evidence from social ratings in microfinance institutions

Does it pay for microfinance institutions (MFIs) to be socially responsible? Drawing on the information asymmetry framework and using an aggregate measure of social performance (social ratings), we investigate the association between MFI corporate social performance (CSP) and capital structure. Our findings suggest that among investors, a relationship between social performance and capital structure only emerges when considering subsidies. We also investigate the effects of profit orientation by analyzing whether the financial structure of for-profit (vs nonprofit) MFIs is sensitive to social ratings. Our findings highlight the importance of social performance as a major determinant of MFI capital structure.

Determinants of Capital Structure: Analysis of the Islamic Banking Industry in the ASEAN Region

<p><em>This study aims to evaluate the factors that influence the capital structure of the Islamic banking industry in the ASEAN region using the trade-off theory as a basis for decision-making. In trade-off theory, book leverage can proxy capital structure as the dependent variable and bank-specific factors, including profitability, earnings volatility, bank size, asset growth, asset structure, and bank age, as independent variables. In addition, it also considers macroeconomic conditions, which are manifested in the gross domestic product and the inflation rate. The study results show that total assets can affect the level of debt because fixed assets can be used as collateral when the bank takes on debt. While other factors do not have a significant effect on the debt level of Islamic banks. These results are the first empirical study to explore the determinants of the capital structure of Islamic banks in the ASEAN region with different variables from previous research and updated sample data, namely the 2016-2020 period.</em></p>

Determinants of capital structure in banking sector: a Bangladesh perspective

Determinants of capital structure in banking sector: a Bangladesh perspective

Do industry differences affect firm-specific capital structure determinants?

The paper explores whether, and how, capital structure determinants differ across industries. Specifically, we investigate whether the typical capital structure determinants of size, profitability, asset tangibility, non-debt-tax-shields and liquidity affect, in a statistically different way, how capital structure is determined across four different industries: manufacturing, commerce, services, and tourism. We show that even though industry effects have been looked at in the various capital structure determination studies, they have not been thoroughly studied in capital structure literature. We apply an interaction effects methodological approach and show that capital structure determinants do differ in terms of magnitude and direction across industries, concluding that industry specifications should be investigated more thoroughly when exploring the capital structure determination puzzle.

Conceptual Paper: Determinants of Capital Structure for Financially Distressed Firms Classified as Sharia-Compliant

Conceptual Paper: Determinants of Capital Structure for Financially Distressed Firms Classified as Sharia-Compliant