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Author: Arvin Ghosh
Publisher: Routledge
ISBN: 1351530178
Category : Business & Economics
Languages : en
Pages : 140
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Book Description
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.
Author: Arvin Ghosh
Publisher: Routledge
ISBN: 1351530178
Category : Business & Economics
Languages : en
Pages : 140
Get Book Here
Book Description
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.
Author: Ishola Akintoye
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
In this paper, we examined the effect of capital structure on organisational performance. We address the following questions: does higher leverage lead to better performance? Is the effect of performance on leverage similar across the distribution of different capital structure? Using a sample of 10 quoted Nigerian firms, with consideration of their financial statements for three years, we discover that an evenly distributed capital structure has positive effect on performance, while the effect of performance on leverage varies across the distribution of different capital structure as seen from the companies understudied.Most of the equity-financed firms in this study performed as much as those who employed debt in their structure in term returns on equity and assets. Although we cannot generalize this fact as few other firms with debt finance performed more efficiently as in the case of Nestle Nig. Plc, Northern Nig. Flour Mills Plc, hence the effect of leverage on efficiency varies across the distribution of different capital structure lending credence to the agency cost theory of Jensen and Meckling (1976). We therefore recommend that investors should concentrate on engagement of efficient management team, motivation and other development programmes so as to achieve goal congruence in long run.
Author: Tobias Burkhart
Publisher: GRIN Verlag
ISBN: 3346462404
Category : Business & Economics
Languages : en
Pages : 65
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Book Description
Master's Thesis from the year 2020 in the subject Business economics - Investment and Finance, grade: 1,3, University of Greenwich, language: English, abstract: This study investigates what kind of impact different leverage ratios have on firm performance measurements Return on Assets, Return on Equity and Tobin’s Q in selected firms listed on Nikkei 225 stock market (excluding Finance & Technology Sector). Furthermore, the influence of sector specific and possible control variables on capital structure (using long- & short-debt ratios) as well as firm performance will be analysed. The sample derive from 165 firms during the time period from 2014 to 2019 and analysed by using various Models multiple regression analysis. Control variables Size and Growth show a clear positive effect on firm performance. In contrast, Tangibility has a negative impact on the model in which all companies are included, but has more positive coefficients in the model in which companies are divided into their industries. Additionally, this study suggests that the effect of leverage on firm performance differs among industries. Short- and long-term debt has positive impacts on different firm performance measurements by the Materials, Reals Estate, Energy and Communication Services Sector.
Author: Cunning Gangeni
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
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.
Author: William M. Gouge
Publisher:
ISBN:
Category : Banks and banking
Languages : en
Pages : 392
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Book Description
Nos. 1-13 include installments of "An inquiry into the principles..."; no. 13-26, installments of "A short history of paper money ..."
Author: Rita Butler
Publisher:
ISBN:
Category :
Languages : en
Pages : 62
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Book Description
Author: Ahmed Riahi-Belkaoui
Publisher: Praeger
ISBN:
Category : Business & Economics
Languages : en
Pages : 238
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Book Description
This text uses theoretical and contingency approaches to examine the question of whether capital structure can be determined. Using a bond rating model it looks at the evaluation of capital structure, the resolution of issues pertaining to equity and liabilities, and their contribution to reports
Author: Rizal Adhari
Publisher:
ISBN:
Category :
Languages : en
Pages : 12
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Book Description
This study aims to investigate the effect of capital structure and ownership structure on firm performance. In addition, this study also examines the existence of reverse causality using firm-level data from three industries of three ASEAN countries, i.e., Indonesia, Malaysia and Singapore. It applies a two-stage estimation method. First, we measure the effect of capital structure and ownership structure on firm performance, which is measured using the non-parametric approach of Data Envelopment Analysis (DEA). Second, we test the reverse causality hypothesis of firm performance to capital structure, which is viewed in light of two competing hypotheses: the efficiency-risk hypothesis and franchise-value hypothesis. Findings from this study reveal that, in general, a firm's capital structure positively and significantly affected firm performance, except for the Indonesian firms. In addition, results showed a positive effect of ownership concentration on firm performance. Finally, results from this study support the efficiency-risk hypothesis that suggests a positive relation between firm performance and capital structure.
Author: Mohamed Tailab
Publisher:
ISBN:
Category :
Languages : en
Pages : 8
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Book Description
This paper empirically aims to analyze the effect of capital structure on financial performance.Two main sets of variables were used: For profitability, return on assets (ROA) as the ratio of net income to total assets, and return on equity (ROE) as the ratio of net income to total shareholders' equity were adopted as a proxy for financial performance; and to indicate capital structure, short-term debt, long-term debt, total debt, debt to equity ratio, and firm's size were used. A sample of 30 Energy American firms for a period of nine years from 2005 - 2013 was considered. Secondary data were collected from financial statements which were taken from Mergent online. The data were analyzed by using Smart PLS (Partial Least Square) version 3. Multiple regressions indicated that 10% of ROE and 34% of ROA were predicted by the independent variables. Findings also presented that the total debt has a significant negative impact on ROE and ROA, while size in terms of sales has significantly negative effect only on ROE of the American firms. However, a short debt significantly has a positive influence on ROE. An insignificant either negative or positive relationship was observed between long term debt, debt to equity and size in terms of total assets and profitability. A generalization of the results is limited because of the small sample size. For future research, the author suggests addressing a longer period of time with a large sample size of firms. It would be more accurate if future studies included more independent variables such as taxation and concentration.
Author: Ekkehart Boehmer
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
We analyze short-term and long-term performance of firms that go public with more than one class of common stock. To assess performance differences that are due to the firm's ownership structure, we create a control sample of single-class IPOs that is matched to the dual-class firms by exchange, offer date, industry, and size. For a comprehensive sample of 98 dual-class IPOs, we document that dual-class firms outperform their matched single-class counterparts in terms of stock-market returns as well as accounting measures of firm performance. Moreover, we find no statistically significant abnormal long-run performance over a three year horizon for dual-class firms. This contrasts with Ritter's (1991) result that IPOs significantly underperform in the three years after going public. We conclude that going public with a dual-class equity structure has net benefits for investors in those firms that choose this specific organizational structure, as evidenced by better operating performance and larger equity returns relative to other IPOs.
