Non-debt Tax Shield Research Articles

MODERASI KEPEMILIKAN INSTITUSIONAL : DAPATKAH MEMPENGARUHI FAKTOR KEUANGAN TERHADAP STRUKTUR MODAL

Abstract The aim of this research was to examine how profitability, liquidity, tangibility, and non-debt tax shield impact the capital structure of manufacturing companies listed on the IDX during the period of 2017-2021, with institutional ownership as a moderating factor. The sample was selected using purposive sampling based on predetermined criteria, and panel data regression analysis was used for data analysis. The hypothesis testing was conducted with a significance level of 5%. The findings revealed that only the variable of non-debt tax shield had a negative effect on the capital structure, while the variables of profitability, liquidity, and tangibility had no impact. The institutional ownership was found to enhance the influence of non-debt tax shields on capital structure, but it did not moderate the effect of profitability, liquidity, and tangibility on the capital structure.

Sectoral analysis of capital structure adjustment: evidence from emerging market

PurposeThis paper aims to investigate the non-homogeneity in the speed of adjustment (SoA) of the capital structure of manufacturing companies. It also attempts to study the key determinants that accelerate the speed of adjustment towards the target leverage level.Design/methodology/approachUsing the dynamic panel fraction (DPF) estimator on the partial adjustment model, the study captures the heterogeneous SoA of 2,866 firms across eight prominent sectors of the Indian manufacturing industry from 2009 to 2020. To ensure robustness, the empirical inferences of DPF are cross-verified with the estimates of panel-corrected standard errors (PCSE).FindingsThe authors find a combination of the capital structure's slow, moderate and rapid adjustment speed along with the relevance of trade-off theory. Interestingly, the lowest and fastest SoA is recorded by the dwindling textile sector and expanding food and agro sector, respectively. Profitability, firm size, asset tangibility and non-debt tax shields are the key firm-specific parameters that impact the SoA towards the target.Originality/valueAvailing the rarely employed estimator ‘DPF’ and the objective of documenting diverse and non-uniform adjustment speeds across the Indian manufacturing sectors marks a novel addition to capital structure literature.

Capital Structure, Profitability, and Block Holder Ownership on Dividend Policy using Free Cash Flow as Moderation Variable

The aim of this study is to investigate the influence of sales growth, company size, profitability, and non-debt tax shield on the capital structure of food and beverage companies in the consumer sector listed on the Indonesia Stock Exchange between 2017 and 2020. The research utilizes secondary data and employs purposive sampling to select a sample of 38 companies. Data analysis involves quantitative descriptive analysis and the use of SmartPLS software for various calculations. The findings indicate that block holder ownership does not significantly affect dividend policy, capital structure does not significantly impact dividend policy, profitability has a positive influence on dividend policy, and free cash flow does not significantly affect dividend policy. It is hoped that future researchers can add knowledge and insight in the field of financial and financing ratios and examine more deeply related to financial performance in the development of primary consumer goods sector companies on the IDX.

Examining Capital Structure Determinants for ASEAN Energy Firms

Increasing energy insufficiency is the main trench for the South East Asian countries. Though, there are rare empirical inquiries in relation to the energy firms’ capital structure determinants for the firms functioning in the Association of Southeast Asian Nations (ASEAN). Therefore, this study is an attempt to discover the capital structure determinants of energy firms that are functioning in the six key economies of ASEAN region which are Malaysia, Indonesia, Thailand, Philippines, Cambodia and Vietnam. In this setting, a total of 144 energy firms’ yearly Panel Data is involved over 14 years period from 2007 to 2020. The seven core determinants of capital structure, namely tangibility, return on equity, current ratio, non-debt tax shield, inflation and annual gross domestic product are inspected in relation to capital structure which is measured by ratio of debt to total asset. Employing both Panel Data models that are Static and Dynamic models via using robust estimator i.e. Generalized Method of Moments (GMM), the results reveal that tangibility and profitability are the most prominent determinants among all others. Evidently, the two newly introduced capital structure determinants that are inflation and energy consumption for ASEAN region energy firms are also reported significant by dissimilar estimators. The significant character of tangibility, profitability and lagged dependent variable directly infers the relevance of Dynamic Trade-Off theory. The findings provide new ways for policy makers to construct parallel strategies which will not only help out to overcome the energy scarcity issues but also to enhance regional level integration.

Market Capitalized Scale and Corporate Capital Structure — Evidence from CSI300’s Listed Firms

The firm’s market capitalization is an ideal proxy of the size of listed firms. Hence, this paper uses the firm’s market capitalization to capture the firm size instead of using other prior proxies to investigate the relationship between the market capitalized scale and corporate capital structure by employing the Generalized Method of Moments (GMM) method to conduct analysis based on a sample of the 300 largest listed firms in China from 2010 to 2017. The CSI300 list consists of two subsample (CSI100 and CSI200), divided upon the firm’s market capitalized scales to represent both large-cap and small-cap firms. Our paper contributes to the literature on corporate finance by obtaining some new empirical results to assess the effect of market capitalized scale on corporate capital structure. We find that the market capitalized size has a significantly negative association with corporate leverage. We also find that both the Trade-Off Theory (TOT) and Pecking-Order Theory (POT) can partially explain the capital structure of the listed firms of the CSI300 Index such that the negative relationship between the market capitalized scales and corporate leverage is firmly identified in small-cap firms. Third, we observe that the greater validity of the POT’s predictions is enhanced in small-cap firms such that the greater inverse impact of profitability and the more significant positive effect of growth opportunities on corporate leverage are clearly shown in small-cap firms. Inversely, the more significant adverse effects of non-debt tax shields on corporate leverage are found in large-cap firms and there is no difference in the impact of tangible assets on debt ratios between CSI100’s listed companies and CSI200’s listed enterprises. Academics and practitioners could use our findings to draw better implications while policymakers could use our results to obtain better policies to improve the banking system with small listed companies.

Revisiting the Paradox in the Capital Structure Practices: Evidence From NSE Listed Companies in India

Capital structure practice becomes an interesting puzzle to be solved in the theory of finance in today’s complex corporate world. In this context, this study investigates the determining factors of capital structure pertaining to companies enlisted in NSE in India in the light of various capital structure theories. The inferences of the study indicate that tangibility and liquidity exhibit negative significant association with Leverage and Non-debt Tax Shield (NDTS) shows direct association with leverage. Tangibility and NDTS demonstrates strong dominance in determining degree of leverage during the period. Thus, it is evident that Pecking order theory has more elucidative power in comparison to other theories.

Pengaruh Beban Pajak, Non Debt Tax Shield, Beban Bunga, dan Pertumbuhan Aset terhadap Struktur Modal pada PT Alam

In running a business, every company definitely needs funds to help develop its business. The funds obtained can come from the company itself or from outside parties who invest in the company. Therefore, in managing the existing funds in the company, it is necessary to have wisdom in deciding whether the funds needed within the company can then be used in accordance with the operational needs needed by the company itself. The purpose of this study was to determine and analyze the effect of Tax Expense, Non Debt Tax Shield, Interest Expense and Asset Growth on the Capital Structure. This study uses multiple linear regression analysis techniques. Data were obtained from literature related to the research topic. This can be in the form of financial statements of tax expense, non-debt tax shield, interest expense, asset growth and capital structure that affect the company. The results showed that Tax Expense has a negative effect on the Capital Structure of Alam Company, Non Debt Tax Shield has no effect on the Capital Structure of Alam company, Interest Expense has a negative effect on the Capital Structure of Alam Company, Asset Growth has a positive effect on the Capital Structure of Alam Company and the Tax Expense, Non Debt Tax Shield, Interest Expense and Asset Growth have an effect on the Capital Structure of Alam Company.

Analysis of Determinants of Debt Financing: A Case study of the Cement Industry of Pakistan

: The aim of this study is to an analysis of Determinants of Debt Financing: A Case study of the Cement Industry of Pakistan. As Profitability is one of the best tools to measure the performance of any firm or sector. The current study also aims to analyze the impact of intangible assets on the profitability of the cement industry of Pakistan. To analyze the impact of intangible assets on profitability some control variables are also used in this research i.e. capital structure, firm size, growth rate, non-debt tax shield, and working capital, alongside these variables intangible assets are also used as a determinant of the profitability and age of the firm is used as a moderator between intangible assets and the profitability of the firm. The Data collected Twenty years of (unbalanced) annual data i.e. 1998 to 2017 of twenty cement companies listed under the Pakistan stock exchange is used and the data sources are secondary. To analyze the data panel data regression is used, the results of the study concluded that a positive and significant relationship exists between intangibles and profitability, and the age of the firm moderated the relationship between the two variables. Firms in Pakistan should report intangible assets in their financial statements, the managers of the said industry need to manage the intangible assets of their firm efficiently and should work on its disclosure in their financial statements.

Revisiting the Drivers of Firm Value; An Empirical Investigation on Manufacturing Firms

The study aims to ascertain the key determinants of firm value and to analyze the contribution of each determinant at different percentiles of the probability distribution of firm value for 1,592 firms across eight major Indian manufacturing firms. The sample consists of data from 2009 to 2020 and studies the variables such as enterprise value, effective tax rate, firm size, profitability, firms’ growth rate, financial leverage, asset tangibility, and non-debt tax shield. The study employed, linear, non-linear, and non-parametric panel regression models. Quantile regression models are further used to decompose the determinants at various quantiles of firm value. Several diagnostic tests such as Breusch–Pagan, White’s Test, and Sargan Test are used to ensure robust estimates. The results obtained from this study show the presence of a concave relationship between firm value with firm size, financial leverage, and non-debt tax shield. Effective tax rates and inflation rates substantially and positively affect the value of firms in higher percentiles. The capital structure is found to significantly and positively affect the value of firms in the lower percentile. The profitability is also found to contribute to the value of firms across all the quantiles, whereas sales growth fails to strongly drive the value.

Moderating Role of COVID-19 Crisis on Firm Leverage Speed of Adjustments: Evidence from Pakistan

This study evaluates the impact of firm-specific, industry-specific, and macroeconomic determinants on the speed of capital structure adjustment and to see if COVID-19 impacted these relationships. Using quarterly data of all listed non-financial firms in Pakistan for the period 2016-2021, a dynamic panel data model using the generalized method of moment (GMM) was used for estimation. It was found that firm size, growth potential, non-debt tax shield, and GDP growth positively impact firm leverage, while profitability and tangibility negatively impact leverage. The study found evidence of convergence to target leverage by Pakistani firms. These firms' capital structure adjustment speed was estimated as 16.7% per quarter. Moreover, COVID-19 was not found to affect the adjustment speed of firms, directly. Furthermore, greater distance from target leverage, growth potential, and GDP growth rate resulted in a lower speed of adjustment, whereas higher profitability and liquidity were found to increase the speed of adjustment.

The Empirical Study of the Impact of Firm- and Country-level Factors on Debt Financing Decisions of ICT Firms

The capital structure has been extensively analysed in the empirical literature. Despite of the great contribution of the technological industry to the global economy, little research has been conducted regarding corporate finance of ICT firms. Moreover, the previous literature barely considers the effect of macroeconomic variables on financial decisions, focusing much more on internal determinants, such as cash flow, firm’s size or growth opportunities. The objective of this work is to reduce this gap by disentangling the reasons behind the financial decisions of technological firms. The sample included 1,510 public ICT firms from 23 countries over the period 2004 – 2019 (17,342 observations). The variables used in this study are obtained from S&P Capital IQ, World Development Indicators, Main Science and Technology Indicators from OECD, and FMI dataset. The two-step system generalized method of moments (GMM) was used as methodology. Consistent with the extant literature, more profitable and liquid ICT firms and those with an increased non-debt tax shields are less leveraged. However, the companies which present higher risk, measured as volatility of EBIT, increase their use of debt financing. Contrary to the findings of many other studies, the analysis of a firm’s size and tangible assets shows non-conclusive results. Regarding macroeconomic determinants, only economic growth and foreign direct investment inflows were found to generate a positive effect on financial decisions of ICT firms. The findings of this work can be used to design and develop policies, measures, and facilitate mechanisms for optimal management of the financing decisions of ICT firms.

Faktor-Faktor Yang Mempengaruhi Struktur Modal Perusahaan

This study aims to explain the variables of firm size, profitability, tangibility and non-debt tax shield in influencing the company's capital structure. The research population is Manufacturing Companies listed on the Indonesian Sharia Stock Index (ISSI) for the 2016-2021 period. The data used in this study is panel data from 16 samples of selected companies, with a total sample of 54. The results show that firm size, profitability, tangibility, and non-debt tax shield have a positive and significant effect on the company's capital structure.

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.

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.

Speed of Adjustment of Capital Structure (Empirical Study on the Aviation Industry in Indonesia and Malaysia)

The purpose of this study is to prove how much SOA capital structure, what factors affect the optimal leverage and what factors affect the SOA capital structure in the airline industry in Indonesia and Malaysia. Hypothesis testing in this study was conducted using panel data regression. The sample used is 10 aviation industry companies in Indonesia and Malaysia with 100 observations from 2010-2019. The regression model is determined based on the results of the Chow and Hausman tests. Empirical findings from 100 observations of panel data variables of company size, short-term debt and non-debt tax shield have a positive and significant effect on optimal leverage. Profitability, asset growth, and business risk variables have a negative and significant effect on optimal leverage. Partial adjustment model (PAM) to measure the speed of firm adjustment to optimal leverage. From the partial adjustment model estimation results, the significant leverage lag indicates that airline industry companies in Indonesia and Malaysia adjust their capital structure towards optimal leverage with SOA of 46.20% per year. Generalized methods of moments (GMM) to estimate the speed of capital structure adjustment. The results show that macroeconomic variables, namely GPD growth, have a negative and significant influence on the speed of capital structure adjustment. In conclusion, it is evident that the funding behavior in the airline industry in Indonesia and Malaysia tends to follow the dynamic trade off theory.

Determinants of Debt Financing: An Empirical Analysis of Non-Financial Listed Companies in Sri Lanka

The purpose of this study is to identify the factors which determine the level of debt financing over the equity financing of the non-financial companies in Sri Lanka. The study is conducted on a sample of 30 companies from non-finance companies listed on the Colombo Stock Exchange (CSE). The sample consists of 20 companies that are selected based on the highest market capitalization and 10 companies which have issued debentures in the market. The data are obtained from the annual reports of sample companies for the years 2015 to 2018 for this purpose. A panel data regression analysis is conducted to analyze whether the firm performance, age, size, agency cost of debt, tangibility, sales growth, liquidity, and tax shield have an impact on the debt financing decisions of the firm. The pecking order theory, agency theory, and trade-off theory are used to explain the impact of determinants on debt financing. The findings of the analysis show that the firm performance, size, liquidity, tangibility, sales growth, and agency cost of debt have generated an inverse association with the firm leverage. Age and non-debt tax shield positively correlated with leverage according to the analysis. Findings are in line with the hypotheses developed except for firm size, tangibility, and non-debt tax shield. The size of the firm and tangibility deviate from the hypotheses developed while the non-debt tax shield is found to be insignificant in influencing its decision to apply for financing. This research has provided the basis to explore the determinants of debt financing in the overall capital structure of Sri Lankan firms. The results are useful for the managers and the policymakers to have knowledge about the firm-specific determinants of debt financing, and it should help corporate managers to make optimal capital structure decisions. This study contributes to enhancing the existing literature by analyzing the impact of determinants of debt financing in listed non-financial companies in Sri Lanka.

What Firm-Specific and Macroeconomic Determinants of Financial Structure Affect Transport and Storage Companies from Selected European Countries?

A number of indicators can be assessed for a company’s financial health, with indebtedness indicators being one of the important ones. The formation of the financial structure is influenced by a huge number of factors. The subject of this research is the indebtedness of companies in the Transportation and storage industry. The companies come from the V4 countries, Austria, Bulgaria, Slovenia, and Romania, between 2010 and 2018. In total 25,246 companies are analysed according to their size for medium and large companies. The aim of the research is to find out whether profitability, liquidity, asset structure, non-debt tax shield, GDP growth rate, reference interest rate, and inflation rate affect the level of total, long-term and short-term debt. The main finding is that corporate debt is significantly affected (measured by the value of coefficients) by non-corporate determinants and specifically the development of the reference interest rate. However, if we look at the most numerous determinants, it is profitability. Companies in the selected industry should focus primarily on the various forecasts within the external environment of the company and include them in their analyses when financing their activities.

DETERMINAN STRUKTUR MODAL PADA SEKTOR PROPERTY, REAL ESTATE DAN CONTRUCTION DI BURSA EFEK INDONESIA

This study investigates the determinants of capital structure policy in the property, real estate, and construction sectors on the Indonesia Stock Exchange. The unit of analysis is financial reports. The sampling technique using purposive sampling method uses the criteria the company does not have negative profits and does not carry out mergers/acquisitions during the 2012-2018 research period; a sample of 224 is obtained. The method of analysis is multiple linear regression analysis. The results showed that the variables profitability, earning volatility, growth opportunity, and size had a positive effect on capital structure. In contrast, the variables of responsibility and non-debt tax shield did not affect capital structure.

Did They Do It Differently? Capital Structure Choices of Public and Private Sectors in Pakistan

Capital structure is one of the most complex areas of strategic financial decision making due to its interrelationship with other financial decision variables. For more than four decades discussion in corporate finance concerns the question of optimal capital structure: Given a level of total capital necessary for supporting firm’s activities, is there a way of dividing this capital into debt and equity which maximises firm value? And, if so, what are the critical factors in setting the leverage ratio for a given firm? Corporate finance literature is overwhelmed by this hot debate, which is still going on, about firm value triggered by the two conflicting conclusions of Modigliani and Miller (1958, 1963). For a comprehensive review of this literature, see Harris and Raviv (1991). The theoretical and empirical research about the optimal capital structure has so far been inconclusive and conflicting. However, the capital structure approach to firm value has been successful to replace heuristics with more methodical approach to define capital structure of the firm. The researchers have theoretically as well as empirically identified many endogenous and exogenous factors affecting the firm’s leverage. They have theoretically and empirically identified agency costs, information asymmetry, taxes, non-debt tax shields, growth, firm size, assets’ collateral value and tangibility, profitability and liquidity, earnings variability, expected costs of financial distress, industry classification, country factor, and firm’s international activities as the determinants of firm’s debt-equity choices.

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.