Impact Of Capital Structure Research Articles

Profitability and Development of Indian firms based on Financial Dynamics

The Judicial blend of debt and equity at which cost of capital is least and estimation of the firm is most maximum is named as optimal capital structure of a firm. The capital structure decision can impact the estimation of the firm through the profit accessible to the investors which amplify the investors' wealth, notwithstanding this capital structure can influence the estimation of the organization by improving its expected income. Hence, the debt ratio changes when there is an irregularity between inside assets and genuine speculation openings and there is data asymmetry in the market. The significance of a proper capital structure is, along these lines, self-evident. Primary variables affecting Capital Structure have been examined right now distinguish the degree of their capital structure impact. The fundamental reason for existing is to look at the effect of "ten financial factors" in particular: profitability, size, risk in the business, asset structure, debt service, development, office cost, bankruptcy ratio, charge shield in tax and uniqueness on the capital structure of chosen organizations, which is spoken to by LEV D/E. Ten unique divisions from Indian corporate have been picked, to break down the significant determinants of capital structure. The information has been drawn from the official sites of the organizations for a time of 2008 to 2018; the information has been gathered for 400 recorded organizations from ten chose segments with the end goal of investigation. Multiple regressions have been applied to discover the noteworthy determinates. Profitability, Growth and Development of the firm, size have pivotal and positive relationship with leverage.

Capital Structure-Firm Value Nexus: Moderating Role of Profitability

This study aims to investigate the moderating role of profitability in the relationship between capital structure and firm value in Jordan, as an example of an emerging economy. For this purpose, two functional models were formulated to capture the direct relationship as well as the interaction impact of capital structure on firm value. The robust empirical findings of panel data analysis provide strong evidence of an adverse relationship between capital structure and firm value. The findings confirm that the impact of capital structure appears to be complicated in nature and difficult to examine without controlling for the interaction of profitability as one of the major determinants. Therefore, studying the interaction effect provides ample evidence and enhances the understanding of the link between firm value and capital structure. The empirical results of the study may provide important insights and policy implications to decision-makers.

Impact of Capital Structure on Financial Performance of Selected Multinational Companies in India

Hundreds of studies researching impact of capital structure on financial performance have been carried across the globe. A selected review of some of the latest ones reveal that most of them have been premised on a thin sample size. Ten such recent studies have minimum sample size of 10 organizations, minimum sample size of 237 organizations and a mean sample size of 56 organizations. The sample size choice has been largely ad-hoc not showing any relationship with the size of population. This research takes a scientific approach to study 400 multinational companies from India based on the population of around 5000 listed companies on the Bombay Stock Exchange. Due sectoral representation was given in the sample selected for the study. Here in this study the impact of capital structure on financial output of the selected companies was studied. Before the full-fledged study was carried, a pilot study was carried on the basis of 30 multinational companies. This article presents the conceptual foundations, literature review and findings from the pilot study.

Struktur Modal dan Pembiayaan BPRS di Indonesia

The development of BPRS is expected to contribute to the market share of Islamic banking in Indonesia. This study aims to analyze the impact of capital structure on the BPRS financing. The object of this research is 164 BPRS in Indonesia, with a range of annual data from 2010 to 2017. The dependent variable is debt and equity-based financing (DEBF). The independent variable is measured using a debt to asset ratio (DAR) and debt to equity ratio (DER). In addition, this study also uses three control variables namely size, GDP growth rate, and provincial inflation. The data analysis technique used is panel data regression. The results show that the capital structure by DAR consistently had a positive and significant effect on the BPRS financing. Moreover, the capital structure by DER does not have a significant effect on the BPRS financing

Relationship Between Capital Structure and Stock Returns of Jordanian Commercial Banks

This study aims to analyze the relationship between capital structure and stock returns of Jordanian banks listed on the Amman Stock Exchange from 2009 to 2018. The study sample is composed of 13 commercial banks in Jordan. The e-views program is used to conduct the statistical analysis of study variables. Initially, a simple linear regression analysis is conducted to determine the impact of capital structure as measured by financial leverage on stock returns and vice versa. Then, several control variables are added: growth in assets, liquidity, firm size, and profitability. This study has found that growth, capital structure, and profitability have a positive impact on stock returns. By contrast, liquidity and firm size have a negative impact on stock returns. Stock returns and firm size have a positive impact on capital structure, whereas liquidity, growth, and profitability have a negative impact on capital structure.

The impact of capital structure on the performance of microfinance institutions

The impact of capital structure on the performance of microfinance institutions

The impact of capital structure on smes in the selected countries-A study on India, Malaysia, Singapore and Thailand

The present research paper examines relationship between the capital structure impacts on SMEs performance. The study test hypothesis is that financial leverage positively affects SMEs (Malaysia, India, Thailand and Singapore) activity through disciplining managers, but the main important components has considered for this paper tax shield and signalling effects. According to Modigliani & Miller (1958, 1963) the analysis of the capital structure decisions has been significant area of research inside the field of finance. In present study it is SMEs and examined whether the factors that affect capital structure are the same for companies belonging to these different size-based groups of SMEs. In besides, given that considerable proportions of SMEs from selected countries have zero long-term debt, the paper analysed the determinants of the probability that a SMEs is using long-term debt financing are the same as determinants of the proportion of this type of financing in capital structure.

The Impact of Capital Structure and Dividend Policy on Firm Performance: A Cross Cultural Study

This study is basically the impact of corporate finance on the firm performance. Two major pillars of the corporate finance are taken into the consideration for measurement of the corporate finance impact on firm performance. This concluded the results by judging the impact of capital structure and the dividend policy on firm performance. This study is cross sectional and cross cultural. South Asian countries have been taken into consideration as population and sample has been taken from manufacturing and food sectors of PSE, BSE, DSE and CSE. Overall 187 companies of four countries have been examined during the study. Panel data regression model is used to conclude the results. We have selected 6 manufacturing sectors for estimation and conclusion covering a time span of 10 years from 2007-2016. Two ratios of firm financial performance are considered to measure the impacts. Two ratios each for measurement of capital structure and dividend policy have been taken as proxies. Our results have shown highly positive impact of dividend policy on firm performance where capital structure has shown highly but negative impact on firm performance. Future research gap has also given on sector, region and variables classification. Recommendations on the basis of conclusions are also given for investors to invest in dividend paying firms, researchers to more deeply dig dividend policy and governments for new legislation's.

The impact of capital structure on the performance of construction companies: A study from Vietnam stock exchanges

The impact of capital structure on the performance of construction companies: A study from Vietnam stock exchanges

Impact of Capital Structure on Indian Banking: An Empirical Analysis

Impact of Capital Structure on Indian Banking: An Empirical Analysis

THE RELATIONSHIP BETWEEN CAPITAL STRUCTURE AND FIRM PERFORMANCE: UNDER THE MODERATING ROLE OF CORPORATE SOCIAL RESPONSIBILITY (CSR)

This paper investigates the moderating effect of Corporate Social Responsibility (CSR) on the relationship between capital structure and firm performance on the Chinese capital market. This paper applied a panel data regression technique using data composition represented by SSE180 index for a period spanning from 2010 until 2019. A total of 86 representative large listed firms was employed in this study for the period of 10 years with a total of 860 firm-year observation. The empirical results showed that debt has a significant negative relationship with firm performance. More importantly, this paper found that the level of CSR moderates the relationship between capital structure and firm performance. The study also found that, the relationship between capital structure and firm performance diminishing when the level of CSR is higher. In China capital market context, the debt ratio is quite high and CSR is a useful business strategy that could diminish the negative impact of capital structure on firm performance. Therefore, firms should comprehensively consider relevant influencing factors, such as CSR, and apply appropriate methods in determining the optimal capital structure in improving their firm performance.

Does Capital Structure Affect the Profitability of Listed Family and Non-Family Firms? Evidence from Bangladesh

The aim of this study is to examine the impact of capital structure on firm performance. The proxy variables of capital structure are short-term debt ratio, long-term debt ratio and total debt ratio where firm performance is measured by return on assets (ROA) of Dhaka Stock Exchange (DSE) listed 39 family firms and 39 non-family firms. Based on a paired match sample selection procedure, 390 firm-years covering the period of 2013 to 2017 are used as the final sample of this study. By extrapolating from the Pooled Ordinary Least Square (OLS) regressions results, it is found that leverage ratios are significantly and negatively associated with the firm’s profitability. It is also found that family firms are highly influenced by debt financing than non-family firms. Finally, this study disagrees with the trade-off theory but agrees with the pecking order theory that profitable firms depend more on equity than debt as their key financing option in Bangladesh.

THE EFFECT OF CAPITAL STRUCTURE AND FINANCIAL STRUCTURE ON FIRM PERFORMANCE (An Empirical Study of The Financial Crisis 2008 and 2009 in Indonesia)

Abstract This research aims to identify the impact of capital structure on Indonesian firms’ performance, particularly on the magnitude of impact at the period prior to crisis, crisis, and the period following the crisis that happened in 2008. The Global Financial Crisis grants a chance to scrutinize the impact of crisis between capital structure and firm performance. Proxies used for capital structure are total debt to total assets, short-term debt to total assets, and long-term debt to total assets ratio. Moreover, firm performance is measured by accounting performance (Return on Asset and Return on Equity) and market performance (Price to Equity Ratio and Tobin’s Q). Samples used include all firms listed in Indonesia Stock Exchange (IDX) from the period 2004 up to 2017, excluding financial sector firms. This research posits that capital structure generally impacts firm performance negatively. The Global Financial Crisis (GFC) that happened in 2008 serves a greater negative impact of capital structure to firm performance than it is before and after crisis. This research is intended for use by firms as a perusal in managing its capital structure, for creditors in managing its lending, and for investors in investing, prominently in times of financial crisis.

Effect of Capital Structure on Financial Performance of Listed Manufacturing Firms in Nigeria

There exists divergence of opinion in the literature on the nature and extent of relationship between capital structure and firms financial performance. Empirical studies on this have documented inconsistent and inclusive findings thereby providing an incentive for further studies to be conducted using different dataset and methodology of analysis to confirm or disprove some of the previous results. This study investigated the impact of capital structure on financial performance of listed manufacturing firms in Nigeria. The study formulated four hypotheses and used generalized least square multiple regression to analyse the panel data extracted from the annual reports and accounts of 31 sampled firms for the period 2009 to 2014. The study found that total debt, long-term debt and short-term debt have significant impact on the financial performance of listed manufacturing firms in Nigeria. The study also found that total debt to total equity has no significant effect on the financial performance of the firms. In view of the findings, the study recommended among others that the management of listed manufacturing firms should work very hard to increase the short term debt to total assets component of their capital structure, since it has positive impact on their financial performance. Also, the firms should reduce the level of total debt to total assets and long term debt to total assets in their capital structure components, because they affect their financial performance negatively.

AN EMPIRICAL ANALYSIS OF CORPORATE CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF LISTED CONGLOMERATES IN NIGERIA

The relationship between capital structure and firms’ financial performance has attracted the attention of many researchers both locally and globally. The paucity of empirical evidence from Nigeria in this regard, especially on Nigerian conglomerate firms, portends the need for further research. Against this backdrop, the study investigated the impact of capital structure on the financial performance of listed conglomerates in Nigerian using descriptive statistics, pairwise correlation and panel data regression technique to analyze the secondary data extracted from the annual reports and accounts of the six (6) selected conglomerates for the period 2008 to 2017. The study found that financial leverage proxy by total debt ratio, long-term debt ratio and short-term debt ratio have significant impact on the selected firms’ financial performance proxy by return on assets, except debt to equity ratio that reveals an insignificant impact on return assets (ROA). Firm size and growth also reported a significant effect on the financial performance of the selected firms. The findings is in tandem with the proposition of the agency cost theory in the Nigeria settings but with caution considering the facts that firms in Nigeria were largely finance through short term debt obligation as against long term debt funding that was presumed in the agency cost theoretical proposition. It is therefore recommended that managers of companies should be guided when seeking credit advances from the financial market as it is important when considering the appropriate capital mix that optimize firm value.

Impact of Capital Structure on Profitability: A Comparative Study of Islamic and Conventional Banks of Pakistan

Impact of Capital Structure on Profitability: A Comparative Study of Islamic and Conventional Banks of Pakistan

ASSESSING THE INNOVATIVE PERFORMANCE OF ITALIAN SMEs

This article aims at assessing the innovative performance of Italian SMEs through the analysis of the many dimensions which together define firms’ innovative capability. The European Innovation Scoreboard (EIS) classifies Italy as a moderate innovator. However, when disaggregating the data, it is possible to observe that Italy performs below the European average, when considering Innovation Enablers (e.g. Human Resources, R&D and Financial Support) and Firms’ Innovation Activities, and above the European average, when focusing on the the Output of innovation, i.e. its economic effect on exports and sales. Thus, it seems that Italian SMEs have been able to exploit agglomeration economies, due to the fruitful activity of industrial districts, and have been the actors of a success story, which combines growth and innovation. Finally, the article identifies and briefly examines three key questions: the impact of capital structure on innovation, the role of public funding in addressing R&D strategies and the potential benefit of the cooperation between firms and universities.

Moderating the Effects of Company Value’s Determinants of Oil Palm Estate Companies

The goals of this study are to test and obtain the empirical evidences of the impacts of capital structure, firm growth, and profitability on firm value with dividend policy as moderator. This study uses the data from quarterly financial statements, annual reports, sustainability reports, and other reports of oil palm plantation companies listed in the Indonesian Stock Exchange (IDX) in the years of 2009 - 2017. There are only 5 companies from the 16 companies listed that meet the given criteria for the analysis. The research results confirm that the negative and highly significant influence of capital structure on the company value during the instable global economy pointed out by the downward trend sales price of crude palm oil (CPO) can be mitigated to be positive and significant by increasing the dividend payment consistently toward the optimal stage. The weakly significant indirect impact of capital structure on the firm value through the company growth can also be leveraged into significant by implementing the same approach. This approach can also leverage the insignificant impact of company growth on the company value into significant. Taking into account the marginal benefits and costs of using the long term bank loan or bond in financing the company operation becomes more and more decisive as a result of the long investment period. The company growth’s stimulation on the profitability is not responded by the investors and makes the influence of the profitability on the company value negative and highly significant. The company growth and profitability mediate the direct effect of capital structure on the company value weakly significantly and the both function as partial mediation. The company growth does not mediate the direct influence of capital structure on the profitability and the profitability does not mediate the direct effect of company growth on the company value.

Capital Structure and Value of Advertising Expenditures: Evidence from an Emerging Market

This paper documents a non-linear impact of capital structure on the value of advertising expenditures in India during the period between 2004 and 2016. India, one of the largest emerging markets, was chosen for study because it has become an important destination for international portfolio investment. These results show that advertising expenditures incurred by firms with moderate levels of debt are more valuable than advertising expenditures incurred by firms with low or high levels of debt. Our results are robust across various proxies of capital structure and across various sub-samples. This paper argues that moderate levels of debt are associated with low agency problems, while low and high levels of debt are synonymous with high agency problems. Differences in agency problems lead to advertising expenditures that have very different levels of value-relevance.

Impact of Capital Structure on Financial Performance of DPSUs (GRSE & HAL)in India.

The capacity of a firm to operate its activities is based on the availability of funds. Normally, these funds in finance literature are termed as long term funds, which are contributed by owners (shareholders) and outsiders. The owners‘funds are represented by equity contributions and internally generated financial resources. A unique characteristic of procuring funds is that a firm may tap any of these sources and hence the blend of these different sources of long term funds is termed as capital structure in finance literature.