scholarly journals Capital Structure Determinants: A Cross-Country Analysis

2020 ◽  
Vol 13 (5) ◽  
pp. 95
Author(s):  
Nader Alber ◽  
Iman S. Youssef
Keyword(s):  
Capital Structure ◽  
Estimation Method ◽  
Bank Lending ◽  
Structure Theory ◽  
Stock Market Development ◽  
Explanatory Variables ◽  
Financial Firms ◽  
Country Analysis ◽  
One Step ◽  
Consumer Borrowing

This paper examines the capital structure across different countries from 2005 to 2015 in Egypt and other three selected countries namely: Turkey, Brazil and Argentina. The book leverage sensitivity to the explanatory variables (profitability, firm size, tangibility, volatility, GDP growth, inflation and stock market development) was examined. Specifically, this paper documents the determinants of capital structure in Egyptian listed non-financial firms and investigates how capital structure decisions in three other countries who are one-step ahead in terms of economic development entertain any unique features. Profitability was the only variable consistently highly significant with negative coefficient obtained in our regressions for four countries using GMM estimation method. Inconsistency of results for other variables prevailed. Findings reveal that Egyptian firms on average are not highly leveraged due to supply constraints on bank lending and demand constraints on consumer borrowing. The empirical evidence seems reasonably consistent with some versions of capital structure theory and other studies.

Nigeria Ailing Industries and the Capital Structure Theory: A Need for Concern

2013 ◽  
Vol 03 (08) ◽  
pp. 31-40
Author(s):  
Ajeigbe Kola Benson ◽  
Fasesin Oladipo Oluwafolakemi ◽  
Ajeigbe Omowumi Monisola
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Stock Exchange ◽  
Capital Intensity ◽  
Structure Theory ◽  
Debt Ratio ◽  
Manufacturing Companies ◽  
Explanatory Variables ◽  
Tax Shield ◽  
Total Debt

It is necessary to identify that what are factors contribute to the firms’ capital structure composition in its operation. Hence the present study was undertaken with the objective of finding out the relationship between capital structure determinants and ailing manufacturing firms of the listed companies in Nigeria. Using a multiple regression analysis, ailing manufacturing companies in Nigeria stock exchange market was examined for the period of 2005-2010. The final sample consists of 14 manufacturing companies. In this study, dependent variable that is, leverage level of the companies, is measured by long-term debt ratio, short term debt ratio and total debt ratio. Capital structure determinants (independent variables) are measured by capital intensity, tangibility, profitability, firm size and non- debt tax shield. Findings showed that the direction of the explanatory variables such as tangibility, profitability, firm size and non-debt tax shields with total debt largely consistent with the explanations of trade-off theory and prove past empirical findings also.

Capital structure in a tax-free economy: evidence from UAE

2017 ◽  
Vol 10 (1) ◽  
pp. 102-116 ◽  
Author(s):  
Yomna Abdulla
Keyword(s):  
Capital Structure ◽  
United Arab Emirates ◽  
Structure Theory ◽  
Comprehensive Overview ◽  
Content Type ◽  
Listed Firms ◽  
Financial Firms ◽  
Main Determinants ◽  
Free Environment ◽  
The Capital Structure

Purpose This paper aims to investigate the determinants of capital structure for non-financial listed firms in the United Arab Emirates (UAE) for the period 2004-2010. The contradiction between the different capital structure theories, limited literature on UAE and its distinctive characteristic of tax-free environment were the motivation for this paper. Design/methodology/approach The authors used two panel data techniques to estimate the regression models, and a series of robustness checks. Findings The authors find that growth opportunities, size, profitability and liquidity are the main determinants of leverage. The results support the argument of the inadequacy of one capital structure theory, although the results are more inclined toward the pecking-order level. Practical implications The results provide a comprehensive overview of the capital structure in the UAE; this information will be of use to managers, shareholders and lenders. Originality/value The findings of this paper contribute to the debate of the dominance of capital structure theories. The results also add to the strand of literature on the capital structure of firms in the Middle East, as the authors provide a comprehensive investigation of the determinants of capital structure in UAE non-financial firms.

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

2004 ◽  
Vol 43 (4II) ◽  
pp. 605-618 ◽  
Author(s):  
Attaullah Shah ◽  
Tahir Hijazi
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Market Value ◽  
Bank Loans ◽  
Structure Theory ◽  
Financial Firms ◽  
Financial Arrangements ◽  
Capital Structure Theory ◽  
Different Levels ◽  
Over Time

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

Role of Credit Rating in determining Capital structure: Evidence from Non-Financial sector of Pakistan

2020 ◽  
Vol 38 (3) ◽  
Author(s):  
Shoaib Ali ◽  
Imran Yousaf ◽  
Muhammad Naveed
Keyword(s):  
Capital Structure ◽  
Credit Rating ◽  
Least Square ◽  
Annual Data ◽  
Leverage Ratio ◽  
Financial Decisions ◽  
Financial Firms ◽  
High Level ◽  
The Impact ◽  
The Capital Structure

This paper aims to examine the impact of external credit ratings on the financial decisions of the firms in Pakistan.  This study uses the annual data of 70 non-financial firms for the period 2012-2018. It uses ordinary least square (OLS) to estimate the impact of credit rating on capital structure. The results show that rated firm has a high level of leverage. Moreover, Profitability and tanagability are also found to be a significantly negative determinant of the capital structure, whereas, size of the firm has a significant positive relationship with the capital structure of the firm.  Besides, there exists a non-linear relationship between the credit rating and the capital structure. The rated firms have higher leverage as compared to the non-rated firms. The high and low rated firms have a low level of leverage, while mid rated firms have a higher leverage ratio. The finding of the study have practical implications for the manager; they can have easier access to the financial market by just having a credit rating no matter high or low. Policymakers must stress upon the rating agencies to keep improving themselves as their rating severs as the measure to judge the creditworthiness of the firm by both the investors and management as well.

Capital Structure Theory and Retention Policy

2011 ◽  
Author(s):  
Tsung-Kang Chen ◽  
Mao-Wei Hung ◽  
Hsien-Hsing Liao ◽  
Ju-Fang Yen
Keyword(s):  
Capital Structure ◽  
Structure Theory ◽  
Retention Policy ◽  
Capital Structure Theory

Capital Structure and Profitability of Selected Listed Non-Financial Firms in Ghana

2013 ◽  
Author(s):  
Anthony Hercules Turkson ◽  
Isaac Aggrey Fyn ◽  
Augustina Sackle Sarkey ◽  
James Kwesi Ansah
Keyword(s):  
Capital Structure ◽  
Financial Firms

scholarly journals Empirical Investigation of Symmetric and Asymmetric Target Adjustment Models: Capital Structure of Non-Financial Firms in Jordan

2017 ◽  
Vol 9 (3) ◽  
pp. 133 ◽  
Author(s):  
Bashar K. Abu Khalaf
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Interaction Model ◽  
Firm Characteristics ◽  
Leverage Ratio ◽  
Financial Firms ◽  
Large Size ◽  
Amman Stock Exchange ◽  
Target Leverage ◽  
The Impact

The different capital structure theories propose the possible asymmetric behavior of capital structure. Thus, this paper empirically investigates whether non-financial Jordanian firms follow symmetrical or asymmetrical adjustment model. Then, an interaction model with the size and profitability (firm characteristics) investigated the impact of low/high profit and small/large size on the adjustment of leverage towards the target leverage ratio. This paper covered the period of 14 years (2002-2015) for a total of 110 companies listed on Amman Stock Exchange (75 industrial and 35 services). Results indicate that although Jordanian firms seek a target leverage ratio, their adjustment towards that target is Asymmetrical and high profitable and large companies tend to adjust faster than low profitable and small size companies.

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