Effect Of Debt Financing Research Articles

Effect of Debt Financing on Financial Performance of Aquaculture Enterprises in Lake Region Economic Block, Kenya.

Effect of Debt Financing on Financial Performance of Aquaculture Enterprises in Lake Region Economic Block, Kenya.

The effect of debt financing on the financial performance of SMEs in Zimbabwe

The effect of debt financing on the financial performance of SMEs in Zimbabwe

A Decision Support System to Estimate Green Sustainability from Environmental Protection and Debt Financing Indicators

In the social context of advocating a low-carbon economy, achieving sustainable growth in line with current social development requirements is an issue that agribusiness must face. In order to explore the mechanisms influencing the sustainable growth of Chinese agriculture and to optimize the quality of agribusiness decisions, this paper examines the relationship between environmental management, debt financing indicators, and financial sustainable growth of the company in Chinese agriculture. Specifically, a decision support system based on the least square dummy variable (LSDV) model, mediating effects model and threshold effects model was constructed by using annual financial reports and questionnaire data of the listed agricultural enterprises. After empirical analysis, the following results were obtained: first, both environmental management and debt financing management help Chinese agricultural firms achieve financially sustainable growth. Second, debt financing can transmit the effect of environmental management on financially sustainable growth. Third, there are significant differences in the effects of debt financing on financially sustainable growth under different environmental management conditions. Finally, in order to promote the development of Chinese agriculture, this paper suggests that agricultural enterprises should actively implement environmental management and that relevant Chinese authorities should lower the financing threshold of the agricultural industry, while ensuring risk regulation.

Corporate governance and R&D investment: the role of debt financing

AbstractThis paper examines the role of debt financing in the relationship between corporate governance and research and development (R&D) investment using a sample of publicly traded U.S. pharmaceutical firms from 2009 to 2018. The results show a positive and significant association between corporate governance mechanisms (such as board size, board independence, board gender diversity, and ownership concentration) and R&D investment and a negative and significant association between debt financing and R&D investment. In addition, we show that debt financing plays a moderating role and a partial mediating role in the relationship between corporate governance mechanisms and R&D investment. Specifically, debt financing attenuates the negative effect of board size on R&D investment and accentuates the positive effect of ownership concentration on R&D investment. Our study helps to shed light on a close and complex relationship existing between the firm’s choices of corporate governance, debt financing, and R&D investments, which the previous literature has so far examined in a partial and fragmented way. To ensure effective R&D investment, firms need to consider the effect of debt financing on corporate governance decisions.

Product flexibility of competitive manufactures: the effect of debt financing

Product flexibility of competitive manufactures: the effect of debt financing

The Effect of Debt Financing on Firm Profitability of Manufacturing Companies in Malaysia

Debt financing has grown rapidly in recent year. Debt financing is one of the common ways for company to increase their capital to run their business. This study focuses on the debt financing towards firm profitability of manufacturing companies listed in Bursa Malaysia. By applying trade-off theory and pecking order theory, this study predicts there are significant relationship on debt financing towards firm profitability. This research would further collect debt financing data of listed manufacturing companies in Malaysia and analyse the relationship by descriptive analysis and regression analysis. This study used 23 companies to determine the debt financing towards firm profitability of the listed manufacturing companies in Malaysia. The data was taken for the period of 8 years which were from 2010 to 2018. The independent variables were debt ratio, long term debt and short-term debt while the dependent variable was the return on equity and used to measure the firm’s performance. The findings will be useful for policymaker and listed manufacturing companies in Malaysia to make better debt financing decisions. Findings of this research will also aid in maintaining an optimum capital structure and maximize the stockholder’s wealth of the listed manufacturing companies in Malaysia.

The Effect of Debt Financing and Equity Financing on Expense Ratio Profit

This study aims to determine the effect of Debt Financing and Equity Financing on the Profit Expense Ratio. The population in this study is Sharia Commercial Banks registered in Bank Indonesia from 2011 to 2018 as many as 11 banks while the sample is determined by the purposive sampling method and meets the criteria of 2 companies. The analytical method used is multiple linear regression models. This method is also called quantitative because the research data is in the form of numbers and analysis using statistics. Regression analysis results obtained an f-value of 4.155 which means that simultaneously has a significant effect on the profit expense ratio. Partial test results with the t-test showed that debt financing was obtained t-value 1,803> t table 1,687 and significant 0.009 <0.05. then it can be said that debt financing has a significant effect on the profit expense ratio. For equity financing obtained t-value 2.913> t table 1.687 and significant 0.045 <0.05. then it can be said that equity financing has a significant effect on the profit expense ratio.

Effect Of Debt Financing On Financial Performance Of Listed Non-Financial Firms In Kenya

This study sought to examine the effect of debt financing on the financial performance of non-financial firms listed on the Nairobi Securities Exchange in the five-year period 2013 to 2017. Using a sample of 23 listed non-financial firms data was collected from published financial statements of the sampled firms and analysed statistical using the panel data regression method. The independent variables were short-term, medium term and long-term debt while the explained variable was return on equity. Three control variables, firm size, sales growth and growth opportunities, were included and considered as having an effect on the relationship between the independent and dependent variables. The study results observed that medium-term debt had a negative and statistical significant relationship with return on equity. Long-term debt had a positive but statistically insignificant relationship while short-term debt had a negative relationship with return on equity.

The Effects of Environmental Management and Debt Financing on Sustainable Financial Growth in the Tourism Industry

Environmental management and sustainable financial growth are currently hot topics in academic research. This article examines the relationships among environmental management, debt financing, and sustainable financial growth in the Chinese tourism industry. The results show that environmental management and debt financing have promoted sustainable financial growth, and the overall effect of debt financing on sustainable financial growth has been affected by environmental management. After employing different methods of controlling the endogeneity, these conclusions are still robust. We also examine the mediating effect and threshold effect on environmental management, debt financing, and sustainable financial growth, and the results reveal that debt financing can mediate the effect of environmental management on sustainable financial growth and that there is nonlinear impact of debt financing on sustainable financial growth in different thresholds of environmental management. The analysis results show that the presented policy proposals promote the development of tourism companies from the aspects of debt financing and environmental management.

Effect of Debt Financing on the Corporate Performance : A Study of Listed Consumer Goods Firms in Nigeria

Effect of Debt Financing on the Corporate Performance : A Study of Listed Consumer Goods Firms in Nigeria

Debt Financing and Corporate Finance Performance: A Dynamic Investigation from Nigeria Quoted Firms

There are two components of corporate capital. This paper examined the effect of debt financing on the financial performance of quoted firms in Nigeria stock exchange using time series data from 2000-2017. The objective was to examine the controversial findings of scholars on the effect of capital structure on corporate performance of firms. Return on assets and return on equity was modeled as the function of debt equity ratio, debt ratio, equity ratio, total liability ratio and long term debt ratio. Multiple regressions with the aid of statistical package for social sciences were used as data analysis techniques. Model one found that a correlation coefficient (r) of .872 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .678 which shows that 67.8% of the variation in Return on Assets is attributable to the variations in the financial leverage. Also, the F- value calculated of 8.338 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROA has a calculated value of 242.032 and a corresponding significance value/probability value of .014. The positive sign of t-value (1.653) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. Model two found that a correlation coefficient (r) of .772 this implies that a very strong correlation exists between return on assets and explanatory variables. The coefficient of determination (r²) is .639 which shows that 63.9% of the variation in return on equity is attributable to the variations in the financial leverage. Also, the F- value calculated of 7.644 has a correlation corresponding value of .004 which implies a good model utility. The test of significance conducted as shown in the tables above states that ROE has a calculated value of 568.906 and a corresponding significance value/probability value of .003. The positive sign of t-value (3.310) shows the direction of the variables. This therefore implies that when a financial leverage is well used, this leads to a better, reliable and fairer financial result that is objective and represent the true state of affairs in the food and beverage companies proportionately. We recommend that management of the firms should work very hard to optimize the capital structure in order to increase the returns on equity and assets and that Management of Nigerian firms should increase their commitments into capital structure in order to improve earnings from their business transaction.

Effect of Debt Financing on Firm Performance: A Study on Non-Financial Sector of Pakistan

Effect of Debt Financing on Firm Performance: A Study on Non-Financial Sector of Pakistan

THE IMPACT OF DEBT FINANCING AND EQUITY FINANCING ON PROFIT EXPENSE RATIO OF ISLAMIC BANKS IN INDONESIA

The purpose of this study is to determine whether Equity Financing and DebtFinancing partially and simultaneously have an impact on Profit Expense Ratio, alsohow the partial effect of each financing systems affect Profit Expense Ratio. Thisresearch is causal research, also called explanatory research is the investigation of(research into) cause-and-effect relationships. The number of taken samples is two, suchas PT. Bank Muamalat Indonesia (BMI) and PT. Bank Syariah Mandiri (BSM). Thedata used in this research are secondary data from published financial statements ofBMI and BSM. The data analysis technique used is linear regression. The results of dataanalysis in this research is partially contained direct or positive relationship betweenDebt Financing and Equity Financing on Profit Expense Ratio. While the effects ofDebt Financing and Equity Financing as the independent variables (X) simultaneouslyaffect Profit Expense Ratio as the dependent variable (Y) on Islamic banks, it meansthat Debt Financing and Equity Financing simultaneously have significant impacts onProfit Expense Ratio of Islamic banks. The obtained value of coefficient ofdetermination (R2) is 0.516 or 51.6%. It means that the variation of these independentvariables, namely Debt Financing and Debt Financing, contribute effects on ProfitExpense Ratio of Islamic Banks. In accordance with the analysis result of this research,it can be seen that Equity Financing is dominant in affecting Profit Expense Ratio ofIslamic Banks compared to Debt Financing. The researcher suggests management ofIslamic banks to prioritize Equity Financing system, especially Musharaka, because thesaid financing system is the most appropriate with Islamic law to apply to muslims.Keywords : Debt Financing, Equity Financing, Profit Expense Ratio

Capital Structure and The Profitability of Listed Retail Firms

The South African retail sector continues to experience a decline in sales and returns amidst growing external competition and a drop in consumer confidence stemming from the recent credit downgrades in the country. Yet, firms in this sector appear to maintain high debt to equity levels. This study investigated whether the capital structure practices of these firms influence their profitability. A Panel data methodology, using three regression estimators, is applied to a balanced sample of 16 retail firms listed on the Johannesburg Securities Exchange (JSE) during the period 2008-2016. The analysis estimates functions relating capital structure composition with the return on assets (ROA). Results reveal a statistically significant but negative relationship between all measures of debt (short-term, long-term, total debt) with profitability, suggesting a possible inclination towards the pecking order theory of financing behaviour, for listed retail firms. Additionally, retail firms are highly leveraged yet over 75% of this debt is short-term in nature. Policy interventions need to investigate the current restrictions on long-term debt financing which offers longerterm and affordable financing, to boost returns. While this study’s methodology differs slightly from earlier studies, it incorporates vital aspects from these studies, and simultaneously specifies a possible model fit. This helps to capture unique but salient characteristics like the transitional effects of debt financing on firm profitability. It therefore delivers some unique findings on the financing behaviour of retail firms that both in form policy change, while stimulating further research on the phenomenon.

FINANCING POLICY OF FIRMS IN THE CONTEXT OF CRISIS-INDUCED VULNERABILITIES

Our study analyses the changes in the financial structure of the firms in the context of the vulnerabilities induced by the financial crisis. The study show that there have been registered a reconfiguration of firms’ financial structure which has triggered an increase in their financial fragility and vulnerability to crises. The results obtained confirm that the effects of financing differ depending on the economic conditions in particular period (normal periods and crisis periods). In tranquil times solvency is more important for the firms than liquidity. After crisis, the firms became more cautious regarding liquidity, solvency and the prospect of securing long-term financial balance. These firms have abandoned the objective of maximizing the positive effects of debt financing adopting a more prudent financing.

Effects of Debt Financing on Financial Performance of Firms Quoted on the Nigeria Stock Exchange 2008 - 2012

Effects of Debt Financing on Financial Performance of Firms Quoted on the Nigeria Stock Exchange 2008 - 2012

Debt Financing and Voluntary Adoption of the International Financial Reporting Standards: Evidence from Korean Unlisted Firms

ABSTRACTWe investigate the effect of debt financing on the voluntary adoption of the International Financial Reporting Standards (IFRS) by unlisted firms and such adoption’s effect on bond credit rating. We find that unlisted firms with public debts are more likely to voluntarily adopt IFRS. Subsequent to the voluntary application of IFRS, the unlisted firms exhibit, on average, enhanced credit ratings. These findings suggest that the public debt market’s demand for high-quality financial reporting may drive those unlisted firms to voluntarily adopt IFRS. Furthermore, rating agencies seem to reward such firms by elevating their bond credit ratings.

Restoring the Ethical Basis of Finance

Contemporary finance, both Islamic as well as conventional, is beset by challenges. These challenges have more in common than would appear at first sight. In Islamic finance, problems stem primarily from the tendency to replicate conventional instruments, while maintaining formal compliance with the Shariah. In conventional finance, it is becoming increasingly clear that the use of fixed income securities (borrowing at interest) is producing a range of unwelcome macroeconomic effects. These effects impose additional costs on society. They include indebtedness, reduced efficiency in the allocation of resources, inflation, unemployment, uneven distribution of wealth and instability in the form of business cycles. To the extent that Islamic finance replicates the instruments of conventional finance, it can be expected to replicate any adverse macroeconomic effects of debt financing as well. Thus, the response to the problems caused by interest-based finance, as well as its replication in Islamic finance, is to supplant financing by lending at interest with financing on the basis of risk sharing. In other words, it requires restoring finance to its ethical foundations. The transformation of finance from lending to risk sharing, however, will require not only a supportive transformation in social outlook, but also appropriate changes in the regulatory framework.

Optimal size, optimal timing and optimal financing of an investment

Corporate investment is an important determinant of economic well-being. The existing literature identifies optimal investment size and timing without the possibility of debt financing, as well as the effect of debt financing on investment timing without the option to choose investment size. This paper contributes to the literature by identifying the optimal size, optimal timing and optimal financing for an investment when the firm controls all three decisions (as it usually does in practice). The investment size and investment trigger are generally positively related: when investment is delayed (accelerated) it is larger (smaller) in size, thus the overall effect on investment is ambiguous. However, when tax rate or bankruptcy cost is increased, the trigger rises and size falls, hence the effect on investment is unambiguously negative. The effect of debt financing on investment depends on the amount of debt used; with the optimal amount of debt, investment is delayed relative to the no-debt case, and this delay can be economically significant; however, the investment, when eventually made, will be larger in size. Overall, it is not appropriate to ignore either the firm’s ability to choose investment size or its option to use debt financing, when modeling the investment decision.

Determinants of Corporate Capital Structure of Norwegian Manufacturing Firms

Under rational expectations, one may interpret a normal capital structure, contingent on variables that differ among firms, as an optimal capital structure. The firms are rational if they adjust to this common normalized capital structure since this norm minimizes the cost of financing. Estimating parameters in this normal capital structure I find that the determinants of capital structure are fixed assets, size, growth, taxes, return on assets and industry category. This study contributes by analyzing the maturity structure in Norwegian non-listed firms. Using a large sample panel data facilitates use of panel data techniques to wipe out unobserved firm heterogeneity that may bias the estimates of the parameters of interest. Robust estimates of standard deviation are also provided. The new findings of this study compared to previous studies are that only the fixed assets seem to have any economic significance as measured by the elasticity between debt and fixed assets. The other variables are statistically significant, however, they do not have a non-trivial magnitude of the elasticities. This study confirms the common belief that the asymmetric information about returns and expected bankruptcy costs have negative effects on the debt-ratio while agency cost of management, asymmetric information about risk and the tax shelter effects of debt financing are increasing the leverage of the firms. The tax effect is controversial since the Norwegian tax systems have been known to treat debt and equity neutrally. The inefficiency of debt financing of growth firms is not supported in the sample, except for the finding that growth firms have more short term debt.