scholarly journals Determinants of Capital Structure for Firms that Provide High Quality Sustainability Reporting

2016 ◽  
Vol 6 (4) ◽  
pp. 22
Author(s):  
Cigdem Vural-Yavas
Keyword(s):  
Capital Structure ◽  
Corporate Sustainability ◽  
Sustainability Reporting ◽  
Short Term ◽  
High Quality ◽  
Sustainability Index ◽  
Tax Shield ◽  
Debt Tax Shield ◽  
Main Determinants

<p>The main objective of this chapter is to understand the determinants of the capital structure of the firms that provide high quality corporate-sustainability reporting. First, all the non-financial companies quoted in Borsa Istanbul (BIST) will be studied in order to see the full picture of the market. Second, all the firms that are included in the computation of the BIST Sustainability Index (XUSRD) will be analyzed as the firms that provide high quality corporate-sustainability reporting. In line with the literature on capital structure variables such as profitability, size, risk, growth, tangibility, non-debt tax shield and ownership structure were picked as the possible determinants of capital structure. Moreover, long- and short-term debt ratios were selected as the proxies for capital structure. Our findings indicate that when capital structure is measured by long-term debt, profitability, size, tangibility, the ratio of free-float outstanding value to total assets, and institutional ownership percentage become the main determinants of capital structure for the whole market. For sustainability index firms, when capital structure is measured by the long-term debt ratio, the main determinants of capital structure become non-debt tax shield and tangibility. On the other hand, for the same type of firms, when capital structure is measured by the short-term debt ratio, tangibility and the ratio of free-float outstanding value to total assets become the main determinants of capital structure.</p>

A study on the capital structure determinants of FMCG companies in India

2021 ◽  
pp. 2150008
Author(s):  
Poornima BG ◽  
Pushpender Kumar
Keyword(s):  
Capital Structure ◽  
Order Theory ◽  
Short Term ◽  
Pecking Order Theory ◽  
Factors Affecting ◽  
Tax Shield ◽  
Total Debt ◽  
Debt Tax Shield ◽  
The Capital Structure

Fast Moving Consumers Goods (FMCG) sector is the fastest and the fourth largest sector of the Indian economy. This study attempts to identify the critical factors affecting the financing decisions of 15 FMCG companies using panel framework and tries to investigate whether the factors considered provide convincing explanation as per the capital structure models like peking order theory, trade-off theory and Agency theory developed over a period of time. The data are collected from CMIE Prowess database for the period 2008 to 2019. The variables considered are profitability, size, non-debt tax shield, tangibility, uniqueness, liquidity and origin. It is found that Pooled OLS is the appropriate model for explaining the factors influencing the short-term debt, long-term debt and total debt as the dependent variables. It is evident that the short-term debt of the company is influenced by profitability, non-debt tax shield and liquidity of the company; the long-term debt is influenced by profitability, tangibility and origin of the company; and the total debt is affected by profitability, size and liquidity of the company. The factors which are significant confirm to the expected behavior with respect to pecking order theory of capital structure.

scholarly journals Determinant of Capital structure of Nepalese hydropower companies

Pravaha ◽  
2020 ◽  
Vol 25 (1) ◽  
pp. 149-158
Author(s):  
Prem Lal Rajbanshi
Keyword(s):  
Capital Structure ◽  
Regression Coefficients ◽  
Regression Equations ◽  
Debt Ratio ◽  
Tax Shield ◽  
Total Debt ◽  
Independent Variable ◽  
Debt Tax Shield ◽  
Size Variable

This study examines the effect of profitability, liquidity, size, tangibility and tax shield on capital structure of Nepalese Hydropower Companies. Debt ratio and long term debt to total assets ratio are taken as dependent variable and Profitability, liquidity, size, tangibility and tax shield are as independent variable. The study reveals that tangibility and non debt tax shield are positively influence the total debt where as profitability and liquidity are negatively influence on the total debt decision of the Nepalese Hydropower Companies. The regression coefficients for size are neither consistent nor statistically insignificant in all regression equations indicating that size variable is not the major factor of determinant of total debt as well as long term debt.

Firm Performance, Capital Structure, and the Tax Benefits of Employee Stock Options

2005 ◽  
Vol 40 (1) ◽  
pp. 135-160 ◽  
Author(s):  
Kathleen M. Kahle ◽  
Kuldeep Shastri
Keyword(s):  
Capital Structure ◽  
Stock Options ◽  
Employee Stock Options ◽  
Short Term ◽  
Tax Shield ◽  
Tax Benefits ◽  
One Year ◽  
Increasing Function ◽  
Options Theory

AbstractThis paper analyzes the relation between the capital structure of a firm and the tax benefits realized from the exercise of stock options. Theory suggests that firms with tax benefits from the exercise of stock options should carry less debt since tax benefits are a non-debt tax shield. We find that both long- and short-term debt ratios are negatively related to the size of tax benefits from option exercise. Moreover, one-year changes in long-term leverage are negatively related to changes in the number of options exercised. Such a relation does not exist for changes in short-term leverage. Finally, firms with option-related tax benefits tend to issue equity, with the net amount of equity issued an increasing function of these tax benefits.

Factors affecting financial leveraging for BSE listed real estate development companies in India

2018 ◽  
Vol 23 (3) ◽  
pp. 274-294
Author(s):  
Rakesh Kumar Sharma
Keyword(s):  
Real Estate ◽  
Capital Structure ◽  
Short Term ◽  
Firm Level ◽  
Content Type ◽  
Factors Affecting ◽  
Tax Shield ◽  
Total Debt ◽  
Real Estate Sector

PurposeThe real estate sector in India has assumed growing importance with the liberalisation of the economy. Developments in the real estate sector are being influenced by the developments in the retail, hospitality and entertainment (e.g. hotels, resorts and cinema theatres) segment, economic services (e.g. hospitals, schools) and information technology-enabled services (such as call centres), and vice versa. This paper aims to study the determinants of capital structure by taking into account 125 major Bombay Stock Exchange (BSE) listed real estate companies selected on the basis of their market capitalisation.Design/methodology/approachTo discover what determines capital structure, nine firm level explanatory variables (profitability-EBIT margin, return on assets, earnings volatility, non-debt tax shield, tangibility, size, growth, age debt service ratio and tax shield) were selected and regressed against the appropriate capital structure measures, namely, total debt to total assets, long-term debts to total assets, short-term debts to total assets, total liabilities to total liabilities plus equity, total debt to capital used and total debt to total liabilities plus equity. A sample of 125 real estate companies was taken and secondary data were collected. Consequently, multivariate regression analysis was made based on financial statement data of the selected companies over the study period of 2009-2015.FindingsThe major findings of the study indicated that profitability, size, age, debt service capacity growth and tax shield variables are the significant firm-level determinants.Research limitations/implicationsThe present study is carried out by taking data of only 25 companies listed on the BSE and time period covered from 2009 from 2015. Time period and sample size may be limitations of the current study.Practical implicationsThe present study is an empirical analysis of the determinants of leverage of real estate sector in India with most recent available data. Different regression equations have been formed to develop the models using firm-specific determinants and different measures of leverage or capital structure. Data were regressed using SPSS application software, and the resulting (or obtained) regression outputs are analysed. This study will help the Indian real estate companies to the know the impact of different variables while raising short-term and long-term loans.Social implicationsThe current study will benefit all stakeholders of society who are fascinated to be acquainted with the financing of real estate companies and the factors affecting long-term and short-term financing of this sector. Specifically, public engrossed in different modes of investment and financial institution will be the prime gainers.Originality/valueThe present study has been completed using authentic data from the annual reports and database. This study uses explanatory variables and different measures of leverage which were limited in use in previous studies. Moreover, this research is a comprehensive study that deals with developing different regression models by using diverse measures of leverage.

scholarly journals Nexus between firm fundamentals and financial leverage in Nepalese nonfinancial firms

2020 ◽  
Vol 23 (2) ◽  
pp. 13-32
Author(s):  
Pitambar Lamichhane
Keyword(s):  
Financial Leverage ◽  
Short Term ◽  
Explanatory Variables ◽  
Tax Shield ◽  
Financial Firms ◽  
Negative Effect ◽  
Debt Tax Shield ◽  
Nonfinancial Firms ◽  
Positive Effect

This paper aims to analyze the nexus between firm fundamentals and financial leverage in Nepalese non-financial firms for the period 2000/01-2017/18 applying descriptive and causal comparative research design. Short-term, long-term and total financial leverage ratios are dependent variables and firm-fundamental variables are considered as explanatory variables. The result of this paper shows that Nepalese firms are highly levered. Regression results of this study reveals that profitability, earning variability, liquidity are major determinants of financial leverage. This study concludes that short-term financial leverage is positively affected by growth and earning variability whereas negatively affected by profitability, tangibility, and liquidity of firms. Similarly, long-term financial leverage is positively influenced by size, assets tangibility, and earning variability whereas negatively influenced by profitability and liquidity. Further, result of the paper reveals positive effect of assets tangibility and earning variability and negative effect of profitability and liquidity on total financial leverage. Finally, this paper concludes that firms’ non-debt tax shield and age of firms have no significant impact on financial leverage in Nepalese non-financial firms.

scholarly journals Impact of selected determinants on the financial structure of the mining companies in the selected countries

2020 ◽  
Vol 20 (2) ◽  
pp. 197-215
Author(s):  
Nicole Škuláňová
Keyword(s):  
World Bank ◽  
Central And Eastern Europe ◽  
Short Term ◽  
Tax Shield ◽  
Mining Companies ◽  
The World Bank ◽  
Gdp Growth Rate ◽  
Debt Tax Shield ◽  
The Impact

AbstractInvestigating the effects on the capital structure has been a widely debated topic for over a century. There are countless studies on this subject today. However, there is still a need to test more samples of companies, as the confirmation or rebuttal of assumptions depends on the industry, country, and size of the selected company. This research deals with the impact of five selected determinants – profitability, asset structure, non-debt tax shield, GDP growth rate, inflation, on the total, long-term and short-term debt of mining companies from eleven selected economies – eight countries from Central and Eastern Europe and three industry leaders from non-European countries. The analysis of data obtained from Orbis and the World Bank database covers the period 2009–2017. Correlation analysis and GMM methods are used to detect the dependencies of variables. Many countries show some links to selected types of debt. Some of these links are in line with the input assumptions, some unfortunately not.

scholarly journals Influence of Selected Determinants on the Financial Structure in the Civil Engineering Companies in the Selected Countries

2019 ◽  
Vol 42 (2) ◽  
pp. 5-15
Author(s):  
Nicole Škuláňová
Keyword(s):  
Capital Structure ◽  
Civil Engineering ◽  
Method Of Moment ◽  
Tax Shield ◽  
Gdp Growth Rate ◽  
Debt Tax Shield ◽  
Generalized Method Of Moment ◽  
The Impact ◽  
Visegrad Group

Analyzing and deciding on capital structure is one of the core activities of any company, as evidenced by the vast amount of research. Each sector is characterized by a different capital structure. This article deals with the impact of profitability, non-debt tax shield, GDP growth rate, and inflation rate on the overall, long-term, and short-term debt of medium and large civil engineering companies. The analysis is carried out for the period 2009–2018 on eleven selected economies, including the extended Visegrád Group and Estonia, Lithuania, and Latvia. The input data is obtained from the Orbis database and the World Bank database. Panel regression using the Generalized Method of Moment is used to analyze the influence of selected determinants on debt.

scholarly journals BANK PROFITABILITY AND MACROECONOMY: EVIDENCE FROM LITHUANIA

2017 ◽  
Vol 24 (2) ◽  
pp. 383-405 ◽  
Author(s):  
Laurynas NARUŠEVIČIUS
Keyword(s):  
Banking Sector ◽  
Short Term ◽  
Empirical Examination ◽  
Bank Profitability ◽  
Pooled Mean Group ◽  
Real Gdp ◽  
Income Statement ◽  
Main Determinants ◽  
The Relationship

The purpose of this paper is to investigate the relationship between profitability of the Lithuanian banking sector and its internal and external determinants. We use the panel error correc­tion model to assess long-term and short-term determinants of items from bank income statements (net interest income, net fee and commission income and operating expenses). The results of the pooled mean group estimator show that bank size and real GDP are the main determinants in the long-term. Meanwhile, empirical examination suggests various variables as short-term determinants of income statement items. The pooled mean group estimation technique and the analysis of sepa­rate income statement items enable us to have a better insight into the Lithuanian banking sector and determinants of its revenue and expenses.

scholarly journals Profitabilitas menjadi pemediasi untuk variabel yang mempengaruhi struktur modal (Studi pada Bank Umum Syariah di Indonesia periode 2016-2020)

2021 ◽  
pp. 160-187
Author(s):  
Indah Lestari
Keyword(s):  
Capital Structure ◽  
Commercial Banks ◽  
Sampling Technique ◽  
Significant Positive Effect ◽  
Tax Shield ◽  
Significant Negative Effect ◽  
Growth Opportunity ◽  
Negative Effect ◽  
Debt Tax Shield ◽  
Positive Effect

The purpose of this study is to find out and analyze whether there is an Influence of Liquidity, Growth Opportunity, Asset Structure, and Non Debt Tax Shield on Capital Structure with Profitability as an Intervening Variable in Islamic Commercial Banks Registered at OJK 2016-2020 ". This research is a quantitative research using data sources derived from secondary data, namely the annual report. The sampling technique used in this research is purposive sampling technique. Of the 14 Islamic commercial banks registered with the OJK, only 11 are in accordance with the sample criteria in this study. This study uses the Eviews 9 application as a tool for data processing. The analytical methods used in this research are stationarity test, panel data regression model test, classical assumption test, regression test, and path analysis test. The results obtained in this study are liquidity has a significant negative effect on capital structure. Growth opportunity and asset structure have a significant positive effect on capital structure. Meanwhile, the non-debt tax shield and profitability variables have no significant positive effect on capital structure. Liquidity has no significant negative effect on profitability, growth opportunity has no significant positive effect on profitability. Asset structure has a significant positive effect on profitability, while non-debt tax shield has a significant negative effect on capital structure. From the results of the path analysis conducted in this study, profitability was not able to mediate the variables of liquidity, growth opportunity, and non-debt tax shield on capital structure, but for the asset structure variable profitability was able to mediate the influence of asset structure on capital structure.

scholarly journals Capital Structure and The Profitability of Listed Retail Firms

2018 ◽  
Vol 10 (1(J)) ◽  
pp. 171-181
Author(s):  
Jason Stephen Kasozi
Keyword(s):  
Capital Structure ◽  
Negative Relationship ◽  
Order Theory ◽  
Debt Financing ◽  
Retail Sector ◽  
Short Term ◽  
Return On Assets ◽  
Pecking Order Theory ◽  
Policy Interventions

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. 

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