Static Trade-off Research Articles

On Elastic Language Models

Large-scale pretrained language models have achieved compelling performance in a wide range of language understanding and information retrieval tasks. While their large scales ensure capacity, they also hinder deployment. Knowledge distillation offers an opportunity to compress a large language model to a small one, in order to reach a reasonable latency-performance tradeoff. However, for scenarios where the number of requests (e.g., queries submitted to a search engine) is highly variant, the static tradeoff attained by the compressed language model might not always fit. Once a model is assigned with a static tradeoff, it could be inadequate in that the latency is too high when the number of requests is large, or the performance is too low when the number of requests is small. To this end, we propose an elastic language model ( ElasticLM ) that elastically adjusts the tradeoff according to the request stream. The basic idea is to introduce a compute elasticity to the compressed language model, so that the tradeoff could vary on-the-fly along a scalable and controllable compute. Specifically, we impose an elastic structure to equip ElasticLM with compute elasticity and design an elastic optimization method to learn ElasticLM under compute elasticity. To serve ElasticLM , we apply an elastic schedule. Considering the specificity of information retrieval, we adapt ElasticLM to dense retrieval and reranking, and present an ElasticDenser and an ElasticRanker, respectively. Offline evaluation is conducted on a language understanding benchmark GLUE, and several information retrieval tasks including Natural Question, Trivia QA and MS MARCO. The results show that ElasticLM along with ElasticDenser and ElasticRanker can perform correctly and competitively compared with an array of static baselines. Furthermore, an online simulation with concurrency is also carried out. The results demonstrate that ElasticLM can provide elastic tradeoffs with respect to varying request stream.

Dynamics-aware loss for learning with label noise

Label noise poses a serious threat to deep neural networks (DNNs). Employing robust loss functions which reconcile fitting ability with robustness is a simple but effective strategy to handle this problem. However, the widely-used static trade-off between these two factors contradicts the dynamics of DNNs learning with label noise, leading to inferior performance. Therefore, we propose a dynamics-aware loss (DAL) to solve this problem. Considering that DNNs tend to first learn beneficial patterns, then gradually overfit harmful label noise, DAL strengthens the fitting ability initially, then gradually improves robustness. Moreover, at the later stage, to further reduce the negative impact of label noise and combat underfitting simultaneously, we let DNNs put more emphasis on easy examples than hard ones and introduce a bootstrapping term. Both the detailed theoretical analyses and extensive experimental results demonstrate the superiority of our method.

LOCATED IN EAST WOLLEGA ZONE, OROMIA REGIONAL STATE, ETHIOPIA, ON DETERMINANTS OF CAPITAL STRUCTURE OF SAVINGS AND CREDIT COOPERATIVE UNIONS

The purpose of this study was to look into the particular factors that affect the capital structure of SACCUs operating in the East Wollega zone. This study used an explanatory and descriptive research design. A non-probability sampling design was used, and the "Agadhaga'ii" SACCU was purposefully chosen. The research unit's financial accounts were used to gather secondary data. For eleven years, from 2011to 2012 to 2021 to 2022, multiple linear regression and correlation analysis were both used for a subset of SACCU. The Statistical Packages for the Social Sciences (SPSS) version 20 and STATA version 14.0 were used to examine the data. The results of this study demonstrate that the study unit heavily utilizes the pecking order theory and the static trade-off theory as two capital structure theories. In order to reduce the weighted average cost of capital while making financial decisions, the researcher advised the management bodies to focus their attention and efforts on the key factors determining the capital structure of the study unit

The Volatility of Capital Structure in Brazil—An Empirical Analysis

The capital structure has been studied consistently since 1952. The volatility of the structures of capital is recent, where the static trade-off theory is questioned, DeAngelo & Roll (2015). It followed this idea, and not only the study of determinants between companies. The aim of this article is to answer if the Brazilian companies are unstable in terms of structure capital and not an exception, and subsequently identify the impact of the volatility of capital structures, profitability, size, sector of activity, etc. 625 non-financial companies were analyzed, from 2003 to 2016, listed on the Brazilian Stock Exchange with models dynamic and static. The results conclude that the capital structures in Brazil are volatile, and that there was not profitability in the companies, even though they had increased their debts.

Capital Structure and Profitability. The Case of Companies Listed in Romania

Abstract Alongside with the acquisition and the efficient use of assets (investment decision and asset management), financial managers are concerned with their financing. The capital structure of a company is of interest not only for practitioners but also for theorists so that in the last six decades important theories were developed from the capital structure irrelevance theory of Modigliani and Miller to theories that include market imperfections and incentives into the models (the static trade-off theory, the pecking order theory). In practice, financial managers take into account not only quantitative determinants, but also qualitative ones, so that the decision becomes complex and the outcome differs across industries and companies. Many empirical studies were performed in the last decades in an effort to identify the relationship between the chosen capital structure and the performance of a company. We aim to add specific results to empirical studies already performed. Our study investigates the relationship between the financial mix and the profitability of companies listed in Romania, covering the interval 2017-2021.

Do adjustment costs influence firms’ target adjustment speeds? International evidence from share repurchase legalization

Do firms change their capital structure adjustment speed towards a target when adjustment costs change? Under a unified capital structure approach that combines the static trade-off and pecking order theories, firms minimize adjustment costs in setting their target adjustment speed. For below-target firms, the availability of share repurchases lowers the expected cost of increasing leverage towards the target. Extending the adjustment cost-based unified framework to the availability of share repurchases, which exogenously lowers the expected cost of leverage increases for below-target firms, I show the availability of share repurchases to result in these firms increasing their leverage adjustment speed towards a target. As predicted, this effect does not hold for the above-target firms.

Nonprofit Capital Structure and Financial Determinants of Nonprofit Debt Instruments

Nonprofits that want to finance infrastructure need to design a capital structure - the mix of accumulated funds and external debt - that can raise enough capital while minimizing borrowing costs. Many scholars test two competing capital structure theories - the pecking order and static trade-off theories - in the nonprofit context by examining the determinants of leverage but cannot find results that conclusively support either theory. The inconsistent results raise the question of whether the applicability of two theories vary by debt instruments, due to the varying issuance costs, and default risks associated with debt instruments To answer these questions, I investigate the financial determinants of the use of debt instruments by nonprofits using IRS 990 form data on public charities from 2010 to 2016 and two-step Heckman selection models. I find the pecking order theory can explain the use of tax-exempt bonds better, while the static trade-off theory can interpret the use of mortgages better. When nonprofits have diversified revenue streams, and rely on a predictable source of revenue, nonprofits increase the use of mortgages but reduce the use of tax-exempt bonds. This paper makes theoretical contributions by delineating the applicability of pecking order and static trade-off theories. Keywords: nonprofits, capital structure, mortgages, tax-exempt bonds

Pecking Order and Static Trade-Off Models of Capital Structure: An Empirical Examination of Sri Lankan Listed Companies

This study examines the applicability of pecking order and static trade-off models of capital structure to Sri Lankan listed companies. Using data for 103 non-financial companies from 2007/08 to 2016/17, we test the two models employing the Generalized Method of Moment method. We find that the magnitude of the relation between the financing deficit and change in debt is very low, and firms finance only a small portion of their financing requirement through debt, providing weak support to the pecking order model. Although more profitable as well as larger firms prefer less debt inconsistent with the trade-off model, high-growth firms seem to use less debt consistent with the trade-off model, giving weak evidence to support the trade-off model as well. The pecking order model seems more applicable because listed companies consider external debt finance when meeting the financing deficit.

Bank Capital Structure Dynamics and Covid-19: Evidence from South Asia

The severity in terms of economic activity of the Covid-19 crisis was higher than the global financial crisis. Covid-19 has not only challenged the economic activity across the world but has put to test how the bank operates under the global crises. The objective of this paper is to identify the impact of the Covid-19 crisis on the South Asian banking sector. We investigate if South Asian banks have target leverage and how the Covid-19 crisis impacted their capital structure dynamics. To fulfill the objective, past data on all banks of South Asian countries listed in the Thomson Reuter Refinitiv were considered. The sample ended up including quarterly data of banks from India, Pakistan, Bangladesh, Sri Lanka, Bhutan Nepal and Afghanistan. Engle-Granger's two-step procedure for error correction and two-step GMM estimation was employed to measure the speed of adjustment and the impact of Covid-19 on bank capital. The study found that the capital structure determinants favor the static trade-off theory for South Asian banks. It is also observed that South Asian banks’ capital was negatively impacted by Covid-19. The analysis supports the view of leverage convergence for the capital structure. This study improves our understanding of the capital structure dynamics of banks in response to exogenous shocks in South Asia.

Bank Capital Structure Dynamics and Covid-19: Evidence from South Asia

The severity in terms of economic activity of the Covid-19 crisis was higher than the global financial crisis. Covid-19 has not only challenged the economic activity across the world but has put to test how the bank operates under the global crises. The objective of this paper is to identify the impact of the Covid-19 crisis on the South Asian banking sector. We investigate if South Asian banks have target leverage and how the Covid-19 crisis impacted their capital structure dynamics. To fulfill the objective, past data on all banks of South Asian countries listed in the Thomson Reuter Refinitiv were considered. The sample ended up including quarterly data of banks from India, Pakistan, Bangladesh, Sri Lanka, Bhutan Nepal and Afghanistan. Engle-Granger's two-step procedure for error correction and two-step GMM estimation was employed to measure the speed of adjustment and the impact of Covid-19 on bank capital. The study found that the capital structure determinants favor the static trade-off theory for South Asian banks. It is also observed that South Asian banks’ capital was negatively impacted by Covid-19. The analysis supports the view of leverage convergence for the capital structure. This study improves our understanding of the capital structure dynamics of banks in response to exogenous shocks in South Asia.

Ambiguity and the Tradeoff Theory of Capital Structure

We examine the impact of ambiguity, or Knightian uncertainty, on the capital structure decision, using a static tradeoff theory model in which agents are both ambiguity and risk averse. The model confirms the well-known result that greater risk—the uncertainty over outcomes—leads firms to decrease leverage. Conversely, the model indicates that greater ambiguity—the uncertainty over the probabilities associated with the outcomes—leads firms to increase leverage. Using a theoretically based measure of ambiguity, our empirical analysis presents evidence consistent with these notions, showing that ambiguity has an important and distinct impact on capital structure. This paper was accepted by Gustavo Manso, finance.

Debt Capacity and Financial Performance of Quoted Firms in Nigeria

Introduction: The field of research treating debt capacity can be comprehended as a unique piece of a lot more extensive capital structure hypothesis. This started with the paper of Modigliani/Miller in 1958. There has been a continuous and serious hypothetical dialog about the ideal capital structure of an organization. One generally new piece of the related discussion is debt capacity and potential connection to the capital structure of an organization.
 Purpose: The purpose of the study was to examine the effect of debt capacity and financial performance of quoted firms in Nigeria. This study expected that debt capacity can be a way to characterize and deal with the capital structure of an organization.
 Methodology: The study formulated 3 hypotheses and the least square multiple regression was used for hypothesis testing empirical results based on 2014 to 2018 accounting and marketing data for 20 quoted firms in Nigeria lend some support to the pecking order and static tradeoff theories of optimal capital structure. Data were sourced from the Nigeria Stock Exchange, Security and Exchange Commission, and other relevant data sources. This study investigated, experimentally, if there might be a significant relationship between the debt capacity of organizations and their financial and market performance. 
 Findings: A firm’s debt capacity was found to have a significant impact on the firm’s accounting performance measure. Debt capacity measures have a positive and significant relationship with the market performance measure (Tobin’s Q). A fascinating finding is that all the influence estimates have a positive and exceptionally critical association with the market execution measure (Tobin’s Q), which could somewhat bolster Myers, (1977)’s contention that organizations with high transient obligation to add up to resources have a high development rate and superior.
 Unique contribution to theory, practice and policy: The consequences of this result further affirm some earlier discoveries by different researchers and prior analysts and the exploration work has had the option to discover answers to the examination addresses prior brought up in the basic part in the accompanying ways. It was therefore recommended that Companies can finance themselves with debt and equity capital. By increasing the amount of debt capital relative to its equity capital, a company can increase its return on equity. Also, in transition, the economic environment is more volatile and riskier than in developed markets. Therefore, a management scheme of capital structure that provides for flexibility in financing is preferable.

THE EFFECT OF CAPITAL STRUCTURE ON THE PERFORMANCE OF MALAYSIAN PLCs DURING A TRANSITION FROM SST TO GST

This study seeks to investigate the effect of capital structure on the corporate performance of Malaysian PLCs during a transition from SST to GST implementation. Especially focuses on the consumer products sector, 60 PLCs were chosen and financial data from 1st April 2014 until 1st April 2017 are observed. The result shows that GST implemented by the Malaysia Government leads to low corporate performance. Further, this study confirms that GST implementation has affected the capital structure and corporate performance of companies. This suggests that short-term debt tends to be less expensive and therefore increasing debt with a relatively low-interest rate will lead to an increase in profit levels. This result is consistent with the Static Trade-off Theory (Myers, 1984) whereby when debt is employed in capital structure, there will be a need for trade-off because firms are faced with the challenges of goods and services tax and bankruptcy cost.

Determinants of Capital Structure: A Study of Original Equipment Manufacturers from Indian Automobile Industry

The main objective of this study is to identify the most significant determinants of capital structure of original equipment manufacturers from Indian Automobile Industry which are listed on the Bombay Stock Exchange for the period 2003-04 to 2016-17. To achieve the objectives of the study, hypotheses were formulated on the basis of review of various theories of capital structure viz. Pecking Order Theory, Static Trade-off Theory, etc. and empirical evidences on the subject. Descriptive statistics, analysis of correlation, and panel data regression including regression diagnostics have been used as statistical tools to identify the most significant determinants of capital structure of the sample companies. STATA software was used for the analysis of the data used in the present study. The results of the analysis carried out in the study revealed that the most significant determinants of capital structure of the sample companies during the selected time period were profitability of company, size of company, liquidity position of company, tangibility of assets, and operating cash flow, while non-debt tax shield, and effective tax rate did not show any significant relationship with the capital structure of the companies under consideration during the period of study. The study also observed evidences in support of Pecking Order Theory, and Free Cash Flow Theory, but no evidences were found in support of Static Trade-off Theory. This study provides useful insight pertaining to the financing behaviour of automobile manufacturing companies in India.

Macro uncertainties and tests of capital structure theories across renewable and non-renewable resource companies

Capital structure is one of the most critical decisions for firms in business. This study examines the role of macro (economic and non-economic) uncertainties in affecting firms’ capital structure management. Three prominent capital structure theories are tested for global resource firms: (1) static trade-off, (2) pecking order, and (3) market timing theory. The results suggest that no single theory prevails, although both pecking order and market timing theories have certain explanatory power to explain sample firms’ financing behaviour. The pecking order theory is strongly supported by the results of the leverage target adjustment model. However, the downward cyclical patterns of pecking order coefficients suggest that the resource firms tend to choose debt financing less and less over time, particularly after 2008. The market timing theory holds strong, as indicated by the significance of macro condition (uncertainties) variables in determining sample firms’ capital structure, especially after 2008 and for non-renewable firms. However, the main proxies of the cost of debt are not statistically significant. In conclusion, this study finds that resource firms have a particular pecking order preference when they need financing, and the influence of macro uncertainties are vital in determining their capital structure.

Determinants of Capital Structure; A Study of Listed Banks in Colombo Stock Exchange in Sri Lanka

This study examines the determinants of capital structure of listed banks in the Colombo Stock Exchange in Sri Lanka. Nine listed banks were taken as samples from the Colombo Stock Exchange for the period of 2007 to 2019. The leverage as dependent variable and GDP growth rate, inflation, size of the banks, Return on Assets, tax, profitability and total debt to equity ratio as independent variables are used to find the relationship between dependent and independent variables. In order to investigate these relationships, panel data least square method was adapted with random effect mode. The findings show that debt to equity ratio tax paid of the listed banks is important as determinants of capital structure of banks in Sri Lanka. However, GDP growth, inflation, size of the banks, Return on Assets, and profitability are found to have no statistically significant impact on the capital structure of the listed banks in Sri Lanka. In addition, the results of the analysis indicate that Pecking Order Theory is pertinent theory in the Sri Lankan banking industry, whereas there is little evidence to support Static Trade-off Theory and the Agency Cost Theory. Therefore, the banks should consider factors appropriately to determine their optimum capital structure in a prudent manner against potential shocks in terms of the regulation stipulated by regulator.

Fair energy efficient scheduler providing high system capacity for wireless networks

Guaranteeing high system capacity while offering low system energy consumption remains a crucial issue in wireless networks. This one becomes again more difficult if high fairness and high Quality of Service (QoS) are also required. The simultaneous achievement of these objectives often requires the usage of tradeoffs that generally provide average overall performance. However, researching a static tradeoff on the whole of these criteria is not optimal since the magnitude of importance of these ones vary according to the context. In previous works, a solution has been proposed which highlights that a dynamic trade-off based on system traffic load could outperform the static ones. In underloaded context, the focus should be put on low energy consumption while, on the contrary in overloaded context, priority should be done on high system capacity. Even though efficient, this solution is unable to provide service differentiation and consequently full fairness and adequate QoS in many context particularly when mobile have different delay constraints or throughput requirements. This paper proposes a new access scheme able to provide Fairness, Energy efficiency and high system Capacity that is called FEC scheduler. This scheme heightens the benefits of opportunistic scheduling by extending cross layer technique from physical layer to higher layers. Resource allocation is performed thanks to a system of weights that dynamically accounts for all three: the radio conditions, the system energy profitability to select a specific user and its experienced QoS. Performance evaluation shows that this solution offers efficient global system energy consumption without downgrading the system capacity while enabling good QoS differentiation and fairness.

Capital Structure of Property Sector in Malaysia

The inconclusiveness of findings on capital structure have been the main debatable topic and discussed again and again till date. This paper is providing new empirical evidence on the relationship between capital structure and firm efficiency by investigating the sample of Syariah-compliant property firms in Malaysia from 2002 to 2011. By employing panel data, this study is examining the factors influencing the firm leverage and analyzing the dynamic aspect of capital structure of the listed Syariah-compliant property firms in Malaysia. The study employs a parametric Stochastic Frontier Analysis (SFA) method as well, to empirically construct the property industry’s ‘best practice’ frontier and measure the firm’s efficiency as the distance from that frontier. Using these performance measures, the researcher examines how efficient firms decide debt level in their capital structure. In summary, it is found that the effects of efficiency on capital structure are as stated in the efficiency-risk hypothesis. Based on the Generalized Method of Moment (Differenced GMM), the results indicate that there are seven determinants that are found significantly influencing the capital structure decision of the firms particularly in property sector in Malaysia. Those determinants are tangibility, profitability, interest coverage ratio, quick ratio, Z-Score, market-to-book ratio and efficiency. Generally the findings support both static trade off theory and pecking order theory for Malaysian Shariah-compliant property firms.

The Determinants of Capital structure in Ethiopian Private Commercial Banks: A Panel Data Approach

A wrong capital structure decision causes business frailer. However, still, what determinants optimal capital structure decision of companies remain the puzzles of many research scholars. This study is, therefore, aimed to investigate the determinants of the capital structure decision of private commercial banks in Ethiopia. The secondary data were obtained from audited annual financial reports of ten private commercial banks and the National Bank of Ethiopia covering the period of 2010-2018. The panel data were analyzed with a clustered robust random effect regression model. The study reveals that there is a significant positive relationship between earning volatility, size of banks, and taxation with leverage while profitability and asset tangibility are found to have a significant negative effect on the banks' leverage decision. The empirical findings of the study imply that the two capital structure theories, static trade-off and pecking order, are essentially explaining the capital structure decision of Ethiopian private commercial banks. Private commercial banks in Ethiopia should pay due attention to the microeconomic variables without overlooking the macroeconomic condition while articulating their optimal capital mix which can minimize the weighted average cost of capital and enhance the value of the company.

Company performance and optimal capital structure: evidence of transition economy (Russia)

PurposeThe paper analyzes the effects of the capital structure on company performance (return on assets). The analysis is conducted in a large sample of high-tech manufacturing and service companies in the transition economy (Russian Federation). In addition to the aggregated analysis, separate investigations are conducted to scrutinize the impact of company age, size and location factors (the effects of agglomerations). This research postulates the existence and variability of the optimal capital structure and its dependence on economic crisis.Design/methodology/approachWe utilized a large sample that includes 1,826 enterprises over the period from 2013 to 2017. The estimation was performed using the panel-corrected standard error estimation technique (Prais–Winsten regression) to account for the panel nature and distributional properties of our data. The existence of the optimal capital structure was assessed based on a curvilinear (quadratic) function.FindingsThe results are consistent with the Static Trade-off Theory and show that this theory is applicable to countries with transition economy. They demonstrate that effective management of the capital structure can increase return on assets by 16–22%. The optimal share of borrowed capital is higher for small businesses compared to larger ones and for enterprises located in agglomerations compared to those located in other regions. A greater increase in profitability can be achieved by larger firm companies compared to smaller ones. High share of borrowed capital leads to negative profitability, i.e. to losses by enterprises. No significant differences in profitability growth were identified between young and mature enterprises. The optimal share of borrowed capital that maximizes return on assets is in the range of 0–21%.Research limitations/implicationsDue to the SPARK policies, our access to the data has been limited to a five-year window, which imposed certain limitations on the choice of econometric methods we could have employed and somewhat limited our ability to contrast the effect of the crisis period with the period of stability. In this sense, although our results pertaining to the effect of the crisis could be treated as conservative, future research should consider extending the panel to include more years into consideration.Practical implicationsWe identified significant differences between optimal capital structures and actual capital structures for high-tech enterprises. The contribution of this study is that the calculations were made for a country with a transition economy under crisis conditions. Countries with transition economies and developing countries tend to be characterized by a high level of interest rates on loans and a high proportion of borrowed capital in total assets. This poses difficulties for companies relying on borrowed capital to finance their operations. At the same time, our results demonstrate that in transition economies, enterprises in high-tech industries do have an optimal capital structure that allows maximizing firm performance. That is, Static Trade-off Theory is applicable to transition economies characterized by high interest rates on loans.Originality/valueThe novelty of this study lies in the detailed analysis of high-tech industries in Russian Federation. This analysis makes use of sophisticated econometric techniques for the first time in this context.