Download or read book Common Determinants of the Firm s Capital Structure and Business Survival written by Evaldo Barbosa and published by . This book was released on 2012-05-16 with total page 268 pages. Available in PDF, EPUB and Kindle. Book excerpt: While methodologically improving upon a previous work, this study seeks empirically to identify the determinants of financial leverage and survival of the very small firms. This is important because, although research in capital structure has been impressively extended since the early 2000s from the study of almost exclusively large firms to SMEs, specific treatment of the very small concerns seems to be necessary and lagging behind. Likewise, much has been done with respect to the determinants of small business exit rates, but with apparently excessive concentration in new firms. Conventional debt ratio analyses reaffirm previous findings or otherwise and throw light upon other not-previously studied relationships, by making use of a larger unbalanced panel data sample, new and unconventional model specifications and breaking down total gearing into its short-, medium- and long-term components. Conventional failure analyses identify many determinants of small businesses' hazard rates at the same time they do not confirm some findings that have been replicated many times in the related literature. Unconventional analyses, however, seem to be successful at unearthing relationships for determinants not confirmed by the conventional, either capital structure or survival, analyses. Out of the traditionally studied factors, only past growth is not confirmed as a determinant of small firm discontinuance. This book reports research results that are remarkable, mainly with respect to the determinants of small firm survival. Notwithstanding, it does not claim to be definitive scientific proof because of its methodological limitations. Instead, the best use to be made of it is that of a reference work to guide students in planning their investigations, analyzing their data and assessing their findings or otherwise. Another application for this book is that it can be viewed as a pilot study conducted to validate methodology before a very costly larger-scale survey takes place. Governmental bodies, trade associations and institutions involved in boosting small business development would be the targeted audience here. A third application for this book is related to the fact that it uncovers superlative behavior of a small subset of the population overlooked by studies using large financial databases. In this case the interested audiences would be practitioners and management undergraduate courses, which are nowadays specializing in many areas and, as a consequence, are in need of acquiring specialized knowledge. Factors empirically analyzed in this book include all those traditionally studied in the SMEs capital structure literature. These are size, asset structure, growth, business risk, profitability, firm age and industry. Factors either never or very rarely empirically studied are also analyzed. These are entrepreneur's risk tolerance, aversion to sharing control, competitive strategy and capital share concentration. Other contemplated factors are operational cycle, capital intensity, total factor productivity, economic conditions, financial constraints, creditworthiness, owner's age, owner's gender, among others. In many instances, more than one measure is used for a factor. Examples are sales variability and sales unpredictability for business risk and machinery/fixed assets ratio, automation degree and capital/labor ratio for capital intensity. For the capital structure analyses, asset composition is broken down into its components, namely, plant & equipment ratio, real state ratio and investments ratio. The OLS multiple regression model is the instrument of analysis chosen for the capital structure investigation. For the duration analysis, the Cox proportional hazard model is the choice. Weibull and Gompertz specifications are also used only for the sole purpose of comparison. All findings, but three, in the whole time-to-event analysis, are statistically significant at the 0.1% level.
Download or read book Capital Structure and Firm Performance written by Arvin Ghosh and published by Routledge. This book was released on 2017-07-05 with total page 140 pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital structure theory is one of the most dynamic areas of finance and forms the basis for modern thinking on the capital structure of firms. Much controversy has resulted from comparisons of the theory of capital structure originally developed by Franco Modigliani and Merton Miller to real-world situations. Two competing theories have emerged over the years, the optimal capital structure theory and the pecking order theory.Arvin Ghosh begins with an overview of the controversies regarding capital structure theories, and then statistically tests both the optimal capital structure and pecking order theories. Using the binomial approach he analyzes the determinants of capital structure while discussing the role of market power in determining capital structure decisions. Ghosh probes the questions of new stock offerings and stockholders' returns, and analyzes capital structure and executive compensation. He then looks into debt financing ownership structure, and the controversal relationship between capital structure and firm profitability. Finally, he discusses the latest developments in the field of capital structure.A concise overview of a major issue in business economics and finance, this volume provides a fuller understanding of capital structure influence on the financial performance of firms, and will certainly stimulate further debate. While hundreds of scholarly articles have been written on the subject this is the first book to test competing theories against measurements of firms' performance and their underlying capital structure.
Download or read book Capital Structure and Corporate Financing Decisions written by H. Kent Baker and published by John Wiley & Sons. This book was released on 2011-03-31 with total page 504 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive guide to making better capital structure and corporate financing decisions in today's dynamic business environment Given the dramatic changes that have recently occurred in the economy, the topic of capital structure and corporate financing decisions is critically important. The fact is that firms need to constantly revisit their portfolio of debt, equity, and hybrid securities to finance assets, operations, and future growth. Capital Structure and Corporate Financing Decisions provides an in-depth examination of critical capital structure topics, including discussions of basic capital structure components, key theories and practices, and practical application in an increasingly complex corporate world. Throughout, the book emphasizes how a sound capital structure simultaneously minimizes the firm's cost of capital and maximizes the value to shareholders. Offers a strategic focus that allows you to understand how financing decisions relates to a firm's overall corporate policy Consists of contributed chapters from both academics and experienced professionals, offering a variety of perspectives and a rich interplay of ideas Contains information from survey research describing actual financial practices of firms This valuable resource takes a practical approach to capital structure by discussing why various theories make sense and how firms use them to solve problems and create wealth. In the wake of the recent financial crisis, the insights found here are essential to excelling in today's volatile business environment.
Download or read book Does capital structure influence firms value written by Ulrike Messbacher and published by GRIN Verlag. This book was released on 2005-12-20 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay from the year 2004 in the subject Business economics - Investment and Finance, grade: 1, University of Applied Sciences Kempten (University of Ulster), language: English, abstract: In accordance with the Signalling model by Ross (1977) an increase in gearing represents, in term of a company’s prospective cash flows, a positive signal to external investors. Because, due to the higher risk of financial distress, companies with less optimistic market prospective tend to avoid additional financial obligations. This implies that an increasing indebtedness means a higher quality of business and therefore better valuation. This leads, in turn, to the assumption that the corporate management can influence a firm’s value by changing its capital structure. If capital structure can affect value, how can firms identify an optimal capital structure and what will it look like? It is that mix of debt and equity that maximises the value of a firm and, at the same time, minimise overall cost of capital. In their seminal article, published in 1958 and 1963, Modigliani and Miller argue that under certain assumptions the value of a firm i s independent of its capital structure, but with tax-deductible interest payments, they are positively related. Moreover, there are other approaches with partly contradictory perceptions. For instance, Myers (1998, cited in Fairchild 2003, p.6) argues that there is no universal optimal mix of debt and equity; in fact it depends on firms or industries, and therefore should be considered on a case-by-case basis. Other researchers have added market imperfections, such as bankruptcy costs, agency costs, and gains from leverage- induced tax shields to the analysis and have maintained that an optimal capital structure may exist (Hatfieldet al.1994, p.1). First, this paper shows the basic determinants of a firm’s value in association with the impact of financial leverage on payoffs to stockholders. Secondly, it considers some arguments of capital structure theories, particularly the Modigliani and Miller theorem and the Traditional approach and contrasts them. Finally, the underlying factors of the model assumptions are examined and shown that they are important in the choice of a firm’s debt-equity ratio.
Download or read book Determinants of Capital Structure in Small Privately Held Firms written by Nicos Michaelas and published by . This book was released on 1996 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book DETERMINANTS OF THE FIRM S CAPITAL STRUCTURE written by EVALDO GUIMARÃES BARBOSA and published by . This book was released on 2009-11 with total page 148 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Capital Structure Determinants written by Yiwen Wei and published by LAP Lambert Academic Publishing. This book was released on 2014-10-01 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt: The capital structure has remained a controversial topic in corporate finance over the last two decades. A proper financing mix contributes to firm value maximization while an unpremeditated decision poses threat to firm survival. Nevertheless, the disparities exist when it comes to capital structure determinants: on one hand, some capital structure theories have provided some guidance; on the other hand, the empirical results are more often than not contradictory. Traditionally, the capital structure of Dutch firms is not well studied as G-7 countries and the evidence that is after 1997 is not available. However, the financial crisis which commences at 2008 is expected to alter capital structure determinants of Dutch firms to some extent. To investigate the temporal developments, this book provides an up to date empirical result to compare with previous Dutch evidences. The analysis should be helpful for management personnel who face the capital structure decisions or Finance researchers who are interested in Dutch evidence.
Download or read book The Capital Structure Decision written by Harold Bierman Jr. and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 1958 an academic paper on corporate finance written by two professors (Merton Miller and Frances Modigliani, who were later awarded the Nobel prize for their research efforts) was published in The American Economic Review. One prime conclusion of their paper was that the exact form of a firm's capital structure did not affect the firm's value. Later papers by the same two authors and by many others modified the assumptions and changed this conclusion. We now think that capital structure decisions do affect a firm's value and corporate managers should understand better the financing alternatives that are available. One of the most important financial decisions is the decision to buy or lease assets. The leasing industry is large and getting larger. Unfortunately, it is very easy for a firm to evaluate incorrectly lease alternatives (see Chapter 12). The capital structure decision is one of the three most important financial decisions that management make (the distribution of earnings and the capital budgeting decisions are the other two contenders). Managers should increase their understanding of capital structure alternatives and remember that choosing the best capital structure is an art and not an exact simple calculation. But applying the art can be improved with understanding.
Download or read book The Determinants of Capital Structure and the Effects of Firm Performance written by Rita Butler and published by . This book was released on 1992 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Empirical Capital Structure written by Christopher Parsons and published by Now Publishers Inc. This book was released on 2009 with total page 107 pages. Available in PDF, EPUB and Kindle. Book excerpt: Empirical Capital Structure reviews the empirical capital structure literature from both the cross-sectional determinants of capital structure as well as time-series changes.
Download or read book Testing Static Trade off Against Pecking Order Models of Capital Structure written by Lakshmi Shyam-Sunder and published by . This book was released on 2023-07-18 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The COVID 19 Impact on Corporate Leverage and Financial Fragility written by Sharjil M. Haque and published by International Monetary Fund. This book was released on 2021-11-05 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the impact of the COVID-19 recession on capital structure of publicly listed U.S. firms. Our estimates suggest leverage (Net Debt/Asset) decreased by 5.3 percentage points from the pre-shock mean of 19.6 percent, while debt maturity increased moderately. This de-leveraging effect is stronger for firms exposed to significant rollover risk, while firms whose businesses were most vulnerable to social distancing did not reduce leverage. We rationalize our evidence through a structural model of firm value that shows lower expected growth rate and higher volatility of cash flows following COVID-19 reduced optimal levels of corporate leverage. Model-implied optimal leverage indicates firms which did not de-lever became over-leveraged. We find default probability deteriorates most in large, over-leveraged firms and those that were stressed pre-COVID. Additional stress tests predict value of these firms will be less than one standard deviation away from default if cash flows decline by 20 percent.
Download or read book Determinants of Capital Structure in Non Financial Companies written by Fabian Kuehnhausen and published by . This book was released on 2014 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we evaluate firm-, industry- and country-specific factors determining a firm's capital structure. The empirical validity of several capital structure theories has been ambiguous so far. We shed light on the main drivers of leverage and depict differences in industry and country characteristics.Using a short panel data set with a large cross-section, we are able to show that firm size, industry leverage, industry growth and tax shield positively affect leverage ratios, while profitability and liquidity have negative impacts. Moreover, our model is an improvement over Rajan and Zingales' (1995) four-factor core model in terms of explaining data variation. The results are robust against different panel estimators, decompositions and over time.
Download or read book Capital Structure and Institutional Setting a Decompositional and International Analysis written by Felix Lopez-Iturriaga and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: The legal and institutional setting is more and more influential in firms' financial decisions. Our paper analyses firms' capital structure in an international framework in order to assess the different level of debt use across countries and to identify both common and differential explanatory factors. Although the level of financial leverage is quite different, the factors that have traditionally driven capital structure decisions have much in common in all the legal and institutional settings. The performance and size of the firm, the assets tangibility and the growth opportunities have a relevant but differential effect across the different institutional systems. Consequently, our results suggest that the legal and institutional system of each country does not only affect firms' capital structure but also creates the conditions to explain a differential effect of the common determinants of firms' financial choices
Download or read book Corporate Capital Structures in the United States written by Benjamin M. Friedman and published by University of Chicago Press. This book was released on 2009-05-15 with total page 404 pages. Available in PDF, EPUB and Kindle. Book excerpt: The research reported in this volume represents the second stage of a wide-ranging National Bureau of Economic Research effort to investigate "The Changing Role of Debt and Equity in Financing U.S. Capital Formation." The first group of studies sponsored under this project, which have been published individually and summarized in a 1982 volume bearing the same title (Friedman 1982), addressed several key issues relevant to corporate sector behavior along with such other aspects of the evolving financial underpinnings of U.S. capital formation as household saving incentives, international capital flows, and government debt management. In the project's second series of studies, presented at the National Bureau of Economic Research conference in January 1983 and published here for the first time along with commentaries from that conference, the central focus is the financial side of capital formation undertaken by the U.S. corporate business sector. At the same time, because corporations' securities must be held, a parallel focus is on the behavior of the markets that price these claims.
Download or read book An Investigation of the Determinants of Firm s Capital Structure written by Biniam Mebrahtu Ghirmatsion and published by . This book was released on 2004 with total page 226 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Determinants of Capital Structure and the Firm s Financial Performance written by Abdulhadi H. Ramadan and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
