Download or read book THE IMPACT OF CAPITAL STRUCTURE ON FIRM S STOCK PRICES WITH FIRM PERFORMANCE AS MEDIATOR written by CHONG SHIEN YEE (TP042427) and published by . This book was released on 2017 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt:
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 The Impact of Capital Structure on Financial Performance of the Firms written by Sedeaq Nassar and published by . This book was released on 2018 with total page 4 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper tries to examine the impact of capital structure on the financial firm performance of industrial companies in Turkey. the annual financial statements of 136 industrial companies listed on I s Istanbul Stock Exchange (ISE) was used for this study which covers a period of 8 years from 2005-20012. A multivariate regression analysis is applied to test the relationship between capital structure and firm performance. To measure firm performance used indicators such as Return on Asset (ROA), Return on Equity (ROE) and Earning per Share (EPS) as well as Debt Ratio (DR) as capital structure variable. The results show that there is a negative significant relationship between capital structure and firm performance.
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 The Relationship Between Capital Structure and the Financial Performance of the Firm written by Cunning Gangeni and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate finance literature suggests that the capital structure decision has played a pivotal role over the years in driving the establishment and growth of firms. There is also a body of evidence that financial markets take a keen interest in firm performance, especially for those listed on the stock exchange. There is no empirical evidence that there is a causal relationship between capital structure and the firm's performance despite the importance of the two concepts in corporate finance. This study uses the debt/equity ratio as a proxy for capital structure and a selected few financial ratios to represent attributes of firm performance (e.g. profitability and shareholder value) in investigating the relationship between the two in the South African context. The results based on stock exchange data as input are inconclusive but they lay a foundation for potential future research. Interesting insights are drawn from using some limitations identified in the literature to try and explain why the results are the way that they are.
Download or read book Capital Structure and Firm Value written by Maloth Raghu Ram and published by Independently Published. This book was released on 2019-05-04 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital Structure decision is one of the crucial decisions to be taken by a company. There are divergent views regarding Capital Structure and Firm Value. There is dearth of studies in the area of Pharma Industry regarding Capital Structure and Firm Value. Therefore, the present study seeks to answer the following questions: what are the factors determining the Capital Structure decision in Pharma sector in India? What is the relationship between select variable and company value? What is the impact of leverage on stock price volatility of Pharma Companies? Period of the study is eleven years from 2005 to 2015. The panel data regression model has been employed. It can be concluded that Debt-Equity Ratio has negative impact on capital structure of a company. It was revealed from the findings that majority of the select variables have significant impact on the capital structure. The study also brings to light the fact that leverage effect is dominant in the stock market. Findings of the present study are useful in gaining valuable insights into the intricacies of capital structure, firm value and leverage effect. The study is useful to finance managers, investors, researchers and also to academicians doing research in the area of corporate finance.
Download or read book The Effects of Complex Capital Structure on the Market Values of Firms written by Thomas J. Frecka and published by . This book was released on 1979 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Capital Structure Industry Pricing and Firm Performance written by Vishnu S. Ramachandra and published by . This book was released on 2008 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides empirical evidence on the link between industry pricing dynamics and industry capital structure. We find evidence of countercyclical mark-up behaviour as predicted by Chevelier and Scharfstein (1996). The mark-ups are more countercyclical for industries with higher debt ratio. Secondly, the paper analyzes growth in firm sales and profitability performance post an industry downturn under different financial structures. This methodology helps mitigate the endogenous nature of capital structure and firm performance, since it is assumed that the downturn was not anticipated by industry participants. Also, inclusion of lagged values of debt ratio (t-2) ensures that spurious relation between contemporaneous values of debt ratio and firm performance is not obtained. We find that firms which are over-levered compared to the industry median experience lower sales growth and lower profitability vis-a-vis a benchmark firm which assumes industry median characteristics. This lends support to the hypothesis that external financing induces financial fragility that leads to reduction in competitive spending at the time of distress.
Download or read book The Effect of Capital Structure and Consolidated Control on Firm Performance Firm Value Insider Trading and Market Microstructure written by Sanjay B. Varshney and published by . This book was released on 1994 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Capital structure and firm performance written by Damaris Bautisma and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Capital Structure Decisions and Corporate Performance written by Ratnam Vijayakumaran and published by . This book was released on 2018 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: Market imperfections such as taxes, asymmetric information and agency problems make capital structure decisions relevant to the value of the firm. More specially, the agency theory suggests that debt financing is one of the governance mechanisms to mitigate agency costs of equity capital and thus to enhance firm performance. This paper provides new empirical evidence on the performance effects of capital structure decisions using a large panel of Chinese listed industrial firms. Using fixed effects regression method, the study finds that leverage is positively related to firm performance, suggesting that debt financing now acts as a governance mechanism for Chinese listed firms to enhance their performance.
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 Capital Structure Equity Ownership and Firm Performance written by Mohd Imran Khan and published by . This book was released on 2018 with total page 14 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigated the relationship between capital structure, equity ownership and firm performance using a sample of 438 BSE-Listed Indian companies over a period of five years (2005-2010). The study constructs efficiency through data envelopment analysis (DEA). Using panel data analysis to examine the effect of efficiency on leverage and the empirical validity of the two competing hypotheses such as efficient risk hypothesis and franchise value hypothesis. The study results were consistent with the Jensen and Meckling (1975) agency cost model and we didn't find any significant impact of efficiency on leverage. There is evidence towards nonlinearities in the relationship between ownership type with capital structure and firms performance. During the study time period, the efficiency and the number of efficient companies had been decreasing due to the recession that broke out at mid-2008.
Download or read book Partial Least Squares Path Modeling written by Hengky Latan and published by Springer. This book was released on 2017-11-03 with total page 434 pages. Available in PDF, EPUB and Kindle. Book excerpt: This edited book presents the recent developments in partial least squares-path modeling (PLS-PM) and provides a comprehensive overview of the current state of the most advanced research related to PLS-PM. The first section of this book emphasizes the basic concepts and extensions of the PLS-PM method. The second section discusses the methodological issues that are the focus of the recent development of the PLS-PM method. The third part discusses the real world application of the PLS-PM method in various disciplines. The contributions from expert authors in the field of PLS focus on topics such as the factor-based PLS-PM, the perfect match between a model and a mode, quantile composite-based path modeling (QC-PM), ordinal consistent partial least squares (OrdPLSc), non-symmetrical composite-based path modeling (NSCPM), modern view for mediation analysis in PLS-PM, a multi-method approach for identifying and treating unobserved heterogeneity, multigroup analysis (PLS-MGA), the assessment of the common method bias, non-metric PLS with categorical indicators, evaluation of the efficiency and accuracy of model misspecification and bootstrap parameter recovery in PLS-PM, CB-SEM, and the Bollen-Stine methods and importance-performance map analysis (IPMA) for nonlinear relationships. This book will be useful for researchers and practitioners interested in the latest advances in PLS-PM as well as master and Ph.D. students in a variety of disciplines using the PLS-PM method for their projects.
Download or read book Capital Structure Dynamics and Stock Returns written by Jie Cai and published by . This book was released on 2013 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many finance theories predict that the capital structure affects firm value, which implies that the changes in leverage have an impact on stock returns. Most of the existing literature however has been focusing on the determinants of the capital structure. Using a sample of U.S. public firms during 1975-2002, we document a significantly negative effect of leverage changes on next-quarter stock returns. This effect remains significant after controlling for other firm characteristics such as ROE, book-to-market, firm size, and past returns. We propose and test several hypotheses to explain the observed effect. We find that the negative effect is stronger for the firms with a higher leverage level. This is consistent with a dynamic view of the pecking-order model that an increase in leverage reduces firms' debt capacity and may lead to future underinvestment. Further tests confirm the negative effect of current leverage change on future investment. In contrast, our results cannot be explained by the trade-off theory, default premium, the market timing theory, or the operational signaling story. Specifically, we find that deviation from the target leverage ratio has no impact on the stock returns, inconsistent with the trade-off theory (which implies an optimal, or partially optimal, leverage ratio). In addition, the change of long-term debt affects stock returns more than the change of short-term debt, and the one-year expected return following leverage change does not increase, both of which are inconsistent with the default risk premium hypothesis. Our results are not driven by firms' market timing activities. A firm times the market by issuing new equity (repurchasing stocks) when its equity is over- (under-) valued, which implies a positive relation between the leverage change and stock return. We also do not find support for the view that leverage increase signals poor future operating performance. Finally, we show that the return effect of leverage change contains information that cannot be explained by the popular pricing factors. This sheds new light on the link between capital structure choice and empirical asset pricing.
Download or read book Business Environment and Firm Entry written by Leora Klapper and published by World Bank Publications. This book was released on 2004 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Using a comprehensive database of firms in Western and Eastern Europe, we study how the business environment in a country drives the creation of new firms. Our focus is on regulations governing entry. We find entry regulations hamper entry, especially in industries that naturally should have high entry. Also, value added per employee in naturally "high entry" industries grows more slowly in countries with onerous regulations on entry. Interestingly, regulatory entry barriers have no adverse effect on entry in corrupt countries, only in less corrupt ones. Taken together, the evidence suggests bureaucratic entry regulations are neither benign nor welfare improving. However, not all regulations inhibit entry. In particular, regulations that enhance the enforcement of intellectual property rights or those that lead to a better developed financial sector do lead to greater entry in industries that do more R & D or industries that need more external finance"--National Bureau of Economic Research web site.
Download or read book Capital Structure Corporate Governance and Firm Performance of Small and Medium Sized Listed Companies written by Yiming Zhang and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Based on the panel data of small and medium-sized companies listed on A-share market from the year 2003 to 2009, the paper analyzes the effect of capital structure and corporate governance on firm performance. In general, debt constrains are negatively related to firm performance. And the relationship between them is closely dependent on the nature of the controller. The empirical result implies the positive relationship between firm performance and some corporate governance mechanisms, such as duality of CEO and COB, state-controlled, and ownership concentration. Independent directors may do harm to the firm performance of small and medium-sized listed companies. Compensation incentive and equity incentive are both effective. Meanwhile, the gap among managers should be reduced.
