Determinants of capital structure in the nigerian chemical. Suwartini 2015 argues that the determinants of capital structure can be in the. Pdf on oct 30, 2015, yusuf babatunde adeneye published research proposal on determinants of capital structure. This paper employs a new database, which contains the market and accounting data from more than chinese listed companies up to the year 2000, to document the characteristics of these firms in terms of capital structure. Capital structure, textile firms, stock exchange and pakistan. This study has laid some groundwork to explore the determinants of capital structure of iranian firms upon which a more detailed evaluation could be.
Capital structure decisions have implications for the success and survival of any firm. The study substantiates the findings of most of the researches conducted on capital structure, concluding that there is an optimal capital structure that is. Based on a sample of 183 nonfinancial publiclytraded firms from 2009. This paper approached the issues of capital structure by evidencing commercial banks in ethiopia to uncover the firm level determinant factors of capital structure. Based on a sample of 183 nonfinancial publiclytraded firms from 2009 to 20, this study uses the estimation method with. Optimal financial leverage determinants for smes capital. The determinants of capital structure provide a significant indication. However, the debate over capital structure started with mm theory of capital structure irrelevance.
Oct 01, 2004 the paper contributes to the capital structure literature by investigating the determinants of capital structure of firms operating in the asia pacific region, in four countries with different legal, financial and institutional environments, namely thailand, malaysia, singapore and australia. Determinants of capital structure in the indian sugar sector april bhattacharjee and mihir dash alliance school of business, alliance university, bangalore, india accepted 7 september, 2015 capital structure is one of the most important decisions in financial management. Tangibility is found to be insignificant and property sector effects are. Mm propose their theory in 1958, stating that the capital structure decisions are irrelevant as the pie will remain same anyhow. Scott 33 suggests that, by selling secured debt, firms increase the value of their equity by expropriating wealth from their existing unsecured creditors. The determinants of capital structure choice sheridan titman and roberto wessels abstract this paper analyzes the explanatory power of some of the recent theories of optimal capital structure. Capital structure leverage level of the firm determined by several factors. In addition to this, the two variables profitability and growth established negative relationship and the remaining four variables tangibility, size, age and taxshield showed positive relationship with capital structure. Capital structure which is the proportion of financing mix of a firm in the form of debttoequity ratio, may thus be perceived as pivotal to the growth and future of a firm. Therefore it is necessary to identify that what are. Determinants of capital structure of listed companies of.
Pdf a major shortcoming of capital structure studies on developing economies is that they. Capital structure, target debt ratio, western europe, tradeoff theory, pecking order theory introduction during the last five decades, research regarding the issue of capital structure has had both theoretical and empirical continuity from miller and modigliani 1958 to. Capital structure is very important in insurance business because there must be proper combination of all the funds accruing to the company so as to avoid excessive debt in the company. The patterns of corporate capital structures around the world are also discussed. These attributes are denoted asset structure, nondebt tax shields, growth. Based on the need to have firms optimal capital structure the currents study sought to find the determinants of capital structure among quoted firms in east africa securities exchange. Thus, this study will examine the firmlevel factors determining the capital structure in the context of nigerian insurance companies. The theory of trade off was developed by kraus and litzenberger 1973 arguing that the companies choose their optimal capital structure by by evaluating the revenue and costs, debt. Determinants of corporate capital structure econstor. Introduction capital structure refers to the way a firm finances its assets through some combination of equity, debt, or securities. The study also shows that areits issued more public debt than seasoned equity issues at a ratio of 1. Istanbul conference of economics and finance, icef 2015, 2223 october 2015. In the corporate form of business, generally it is the job of the management to make capital structure decisions in a way that the firm value is maximized.
Proper capital structure leads the firm to achieve the better performance and ensures the sustainability in its operation. Pdf determinants of capital structure and testing of theories. Full length research paper determinants of capital structure. In section 2 the potential determinants of capital structure are summarized and theoretical and empirical evidence concerning these determinants is provided. Full length research paper determinants of capital. According to our results, leverage of a firm is positively correlated with size and it is negatively correlated with. The use of long term fixed interest bearing debt and. This study has been guided by the capital structure theory i. Determinants of capital structure an empirical evidence, us by ra the university of lahore, pakistan. Determinants of the capital structure of small and medium.
The signs of the determinants show that both pecking order theory and the tradeoff theory are at work in explaining the capital structure of areits, although more evidence exists to validate the latter theory. Evidence from macedonian panel data, economic analysis, national. Pdf determinants of capital structure stranetig corporate. Top pdf determinants of capital structure of construction company.
The paper also explores the capital structure theories and how they explain capital structure decisions of firms worldwide and in vietnam. Find, read and cite all the research you need on researchgate. They possibly will need to know the factors that influence the capital structure. Pdf the main purpose of this study is to examine the determinants of. Determinants of capital structure of listed companies of textile and sugar sector during different economic periods noah yasin mba executive scholar foundation university rawalpindi campus abstract. This study investigates the determinants of capital structure in turkey by using. Many theoretical studies about capital structure have been developed over past decades with the hope of obtaining the determinants to achieve the optimal capital structure. The objectives of this study are to identify the significant determinants of capital structure of the listed manufacturing companies in bangladesh and to test the. Capital structure, debt, manufacturing industry, panel data, romania introduction decisions concerning capital structure are imperative for every business organization. I will pick multiple determinants that according to earlier research should influence capital structure and research the relation between them and the capital structure of dutch firms specifically. Variation in capital structure of the company affect the financial performance of the business and the value of the company where reaching the optimal debt ratio would reduce the. To date, many studies and theories are proposed describing the determinants of capital structure. This paper analyzes the determinants of capital structure of mongolian listed firms, employing accounting data from the year 2010 to 20, of 23 firms. The capital structure decision is a continuous process.
Factors affecting capital structure choice dergipark. This therefore calls call for a concerted effort towards ensuring efficient capital mix, by the firms management. Using panel data methodology, the determinants of capital structure in 34 australia listed property trusts areits are investigated for the period 20032008. The capital structure is defined as the ability to raise funds and partially offset by an increase in organizational. This study examines that a large part of work on the capital structure. The capital structure determinants of indonesia publicly. Capital structure, target debt ratio, western europe, tradeoff theory, pecking order theory introduction during the last five decades, research regarding the issue of capital structure has had both theoretical and empirical continuity from miller and modigliani 1958 to contemporary models and theories. The determinants of capital structure endri ajbals mars 2018. The determinants of the capital structure right now is a difficult decision for cooperative organization, that need to consider several factors which can influence capital structure. How it is done is important, given the incorrect combination of finance will affect the performance and.
The capital structure in financial terms mean the way companies finance their assets through a combination of equity, debt, or mixed securities myers, 2001. Determinants of capital structure in nigerian quoted. Dec 06, 2020 a wrong capital structure decision causes business frailer. Comparison of empirical evidence from the use of different estimators, authorz. The determinants of the capital structure of listed on. The determinants of the capital structure of listed on stock. Determinant factors of the capital structure of a firm an.
Pdf research proposal on determinants of capital structure. In section 1 the most prominent theoretical and empirical findings are surveyed. In another study we did not find a relationship between the age of the company and its capital structure predkiewicz, predkiewicz 2014. The determinants of this study like liquidity of firms, non debt tax shields like depreciation, more collateral net fixed assets, earnings volatility, size of firms, net commercial trade position and firms profits have impact on the capital structure choice. Jan 01, 2006 the majority of empirical studies of capital structure, such as bradley et al. The determinants of capital structure choice titman 1988. Empirical analysis of oil and gas firms during 20002015. In particular, this study investigates capital structure determinants of nigerian manufacturing firms based on a panel data set from 2007 to 2014 263firmyear observations comprising 31 listed. Even though there are several factors contribute to the institutional performance, determinants of the capital structure play an important role. Empirical results reveal that profitability, growth opportunity, and operational risk are negatively related to leverage while size is positively related. First, it examines a much broader set of capital structure theories, many of. The optimal capital structure is the only combination which maximizes the market values of companies. Pdf purpose this paper aims to investigate the determinants of capital structure of nonfinancial firms in iran.
In short, the capital structure are a combination of corporate debt longterm and shortterm, common stock and preferred stock. In general, leverage of czech listed firms is relatively low if measured in book value, but it is relatively high if measured in market value. Based on data availability, eight potential determinants of capital structure were analysed in this paper size, profitability, tangibility, growth opportunities, tax, nondebt tax shields, volatility, and industry classification. The capital structure puzzle is unravelled and a clear picture is presented in terms of why capital structure matters. To discover what determines capital structure, six firm. Ani and amri 2015 studied that the capital structure leverage determinants in three subsectors of omani industrial enterprises construction, chemical and products registered. The motivation s for study ing the capital structure, although this issue has been widely discussed, rely on the lack of consensus regarding the determinants of capital structure and about the theory xqghuo\lqjpdqdjhuvghflvlrqv in fact, the empirical results depend on the sample used and the period in analysis. Accordingly, financial managers will principally want to know the relationships between certain firmspecific measures and the debt ratio. Thus, profitability, size, growth, tangibility, cost of financial distress and nondebt tax shield effects are the determinants of capital structure for the it firms in the. Variation in capital structure of the company affect the financial performance of the business. This study examines that a large part of work on the capital structure remained focused on firmlevel. Determinants of capital structure a study of oil and gas sector of pakistan mahvish sabir foundation university islamabad qaisar ali malik assistant professor, foundation university islamabad abstract capital structure decisions have been the most significant decisions to be taken by the finance experts in a corporate sector organization. The capital structure of financing pattern decision is a significant managerial decision.
The purpose of this paper is to study the key determinants of capital. Determinants of capital structure a study of oil and gas. Capital structure theories the pecking order and the tradeoff are applicable for most of the studies focusing on the determinants of capital structure decisions. They possibly will need to know the factors that influence the capital structure of their firms. However, still, what determinants optimal capital structure decision of companies remain the puzzles of many research scholars. This paper analyses determinants of capital structure of listed companies in the czech republic during the period from 2000 to 2001. The capital structure decision is important decisions made by the management to secure the lower cost of capital which maximize the shareholders wealth. Determinants of capital structure a study of manufacturing. After 2008s financial crisis, the significance of regulatory capital gained increasing interest in bank industry ben ukaegbu, 2010. As in other countries, leverage in chinese firms increases with firm size, nondebt tax shields and fixed assets, and decreases with profitability and correlates with. The econometric analysis employs the system generalized method of moments estimator gmmsys and two strong results. As a result, the market value of the share may be affected by the capital structure decision. Top pdf determinants of capital structure of construction.
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