The Effect Of Capital Structure On Firms Profitability
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The Effect Of Capital Structure On Firms Profitability
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Author : Tariku Negasa
language : en
Publisher: LAP Lambert Academic Publishing
Release Date : 2013
The Effect Of Capital Structure On Firms Profitability written by Tariku Negasa and has been published by LAP Lambert Academic Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
This book aims to investigate the effect of capital structure on firms' profitability with special emphasis on Ethiopian large private manufacturing firms. This book contributes a piece of empirical evidence for a theory of capital structure, in Ethiopian context. The decision regarding firm's capital structure choice is an important issue for financial managers, because it is very much influential on the firm's profitability and value. In today's dynamic business world, for a sound operation the companies, financial managers' decision regarding capital structure should have to have a greater consideration on searching of its optimum level. In general, the firm's capital structure decision affects the two major objectives of financial management, i.e. firm's profit maximization and shareholders' wealth maximization.
The Effect Of Capital Structure On Profitability Of Energy American Firms
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Author : Mohamed Tailab
language : en
Publisher:
Release Date : 2018
The Effect Of Capital Structure On Profitability Of Energy American Firms written by Mohamed Tailab and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
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.
Capital Structure And Firm Performance
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Author : Arvin Ghosh
language : en
Publisher: Routledge
Release Date : 2017-07-05
Capital Structure And Firm Performance written by Arvin Ghosh and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-07-05 with Business & Economics categories.
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.
Effect Of Capital Structure On Profitability Of Listed Manufacturing Companies In Sri Lanka
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Author : Saratha Anandasayanan
language : en
Publisher:
Release Date : 2016
Effect Of Capital Structure On Profitability Of Listed Manufacturing Companies In Sri Lanka written by Saratha Anandasayanan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Capital structure is one of the most complex areas of financial decision making due to its interrelationship with other financial decisions variables. Capital structure is the composition of debt and equity capital that comprise a firm's financing its assets and can be rewritten as the sum of net worth plus preferred stock plus long-term debts The problem statement to be analyzed in this study is: Does capital structure affect the listed manufacturing companies in Sri Lanka? The study sample consists of 12 Manufacturing companies listed in Colombo stock Exchange . Net profit ratio is used to measure the profitability. Debt equity ratio, Long term loans to total asset and short term loan to total assets ratios are used to measure the capital structure of the companies. Applying correlations and fixed effect regression analysis, the results reveal significantly negative relation between debt and profitability. This suggests that profitable firms depend more on equity as their main financing option .Yet recommendations based on findings are offered to improve certain factors like the firm must consider using an optimal capital structure.
Capital Structure Earnings Management And Risk Of Financial Distress
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Author : Pietro Gottardo
language : en
Publisher: Springer
Release Date : 2018-09-24
Capital Structure Earnings Management And Risk Of Financial Distress written by Pietro Gottardo and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-09-24 with Business & Economics categories.
This book analyzes the impacts that family control of firms has on capital structure choices, leverage and the risk of financial distress, earnings management practices, and the relation between accounting choices and firm market value. For these purposes, longitudinal data on Italian family and non-family non-financial firms are closely analyzed. The Italian setting is of special interest in this context because family businesses account for 94% of GDP, families are particularly committed to maintaining control of firms, and the economy is bank based rather than market based. The analyses draw on the socioemotional wealth approach, which emphasizes the importance of the stock of emotional value in family firms, in combination with financial theories such as Pecking Order Theory, Trade-off Theory, and Agency Theory. The findings cast significant new light on differences between family and non-family firms and the effects of different forms of family influence. The book will have broad appeal for academics, managers, practitioners, and policymakers.
Impact Of Capital Structure On The Profitability Of Quoted Insurance Companies In Nigeria
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Author :
language : de
Publisher: GRIN Verlag
Release Date : 2021-12-03
Impact Of Capital Structure On The Profitability Of Quoted Insurance Companies In Nigeria written by and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-12-03 with Business & Economics categories.
Studienarbeit aus dem Jahr 2020 im Fachbereich BWL - Bank, Börse, Versicherung, , Sprache: Deutsch, Abstract: The study examines the impact of capital structure on the profitability of Nigerian quoted insurance companies with specific emphasis on AIICO Plc which is one of the 15 quoted insurance companies in Nigeria. The scope covers the period of ten (10) years (2010 to 2020). AIICO PLC was selected based on the criteria of data availability. The study assists financial managers of firms to determine the proportion of equity capital and debt capital (capital structure) to obtain the debt financing mix that will optimize the value of the firm. This study, therefore, has contributed to the literature by examining capital structure and profitability of Nigerian quoted insurance companies. The study aids in the understanding of the impact of capital structure on insurance profitability. This has helped us to understand the impact of capital structure in profitability of Nigeria quoted insurance companies. The outcome from this study will help decisions on capital structure and allow the policy makers in formulating informed policies on capital structure and also to measure the implications of such policies on the operations of quoted insurance companies. This will go a long way in helping investors in deciding whether to pull out their share in pursuance of capital gains or preserve their stake in a corporation. The study will contribute to existing body of knowledge by investigating capital structure and profitability of Nigerian quoted insurance companies.
Debt And Profitability
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Author : Dr. Sasikanta Tripathy
language : en
Publisher:
Release Date : 2019
Debt And Profitability written by Dr. Sasikanta Tripathy and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
Capital structure has been a database issue in financial economics ever since Modigliani and Miller showed in 1958 that given frictionless markets and homogeneous expectations, the capital structure decision of the firm is irrelevant because it does not contribute towards the firm's growth. The dilemma firms are faced with is making a decision on the capital structure choice to use. The purpose of this paper is to find out the effect of capital structure on financial performance of firms based on ROE, ROA, Tobin's Q and EPS for the companies listed both at BSE and NSE over the period 2011-2016, measured through a simple regression model. Results indicate that Capital Structure is significantly and positively associated with firm Performance when measured by Tobin s Q, however they report a negative relationship between capital structure with firms' performance when measured by ROA, and no significant relationship when measured by ROE as well as by EPS. Altogether, the study provides evidence which indicates firm performance is positively or even negatively related to capital structure. One important reason for this conflicting result can be the high cost of borrowing in developing countries like India. This study contributes to the empirical literature on the effect of capital structure on financial performance of Indian firms.
The Effect Of Capital Structure On Profitability
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Author : Ahmed Al-Ajlouni
language : en
Publisher:
Release Date : 2014
The Effect Of Capital Structure On Profitability written by Ahmed Al-Ajlouni and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
The study aims at exploring the relationship between the capital structure and the profitability (measured by ROI, ROE and NPR) of the petrochemical industry firms in the Kingdom of Saudi Arabia, and the direction of this relation for the targeted firms during the period 2008-2011.The researchers used the simple regression model to estimate the relationship between the independent variable (Debt Ratio) and the measures of the dependent variable (Profitability ratios), this was done by using the Cross Section - Time Series (Panel Data) since it is appropriate for the nature of data (group of firms for a multiple years). The results revealed that there's no significant relationship between capital structure and ROI and ROE, while it showed very week relationship with NPM. This means that the profitability performance of the petrochemical industry firms in KSA is not relevant to capital structure, and there're other factors that affect the profitability of these firms.
The Effect Of Profit Margin On Capital Structure
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Author : Rathiranee Yogendrarajah
language : en
Publisher:
Release Date : 2014
The Effect Of Profit Margin On Capital Structure written by Rathiranee Yogendrarajah and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
Profit margin is a way of measuring how well a company is doing, regardless of size of the organizations. The capital structure is how a firm finances its overall operations and growth by using different sources of funds. The successful selection and use of the debt-to-equity ratio is one of the key elements of firms' financial strategy. The profit margin is a key element to determine the capital structure. The firms may have their retained earnings to increase their capital structure. The purpose of this study is to investigate the effects of profit margin on Capital Structure of listed manufacturing companies in Sri Lanka. The present study tries to investigate the relationship between net profit margin on sales and debt-to-equity ratio by taking into consideration in the level of firms' investment. The research question is arisen “What extent the profit margin affects the capital structure?” For this purpose 13 listed manufacturing companies in Colombo stock exchange in Sri Lanka have been selected for the period of 2005-2009. The data have been analyzed by using correlation and regression analysis to find out the association between the variables. In our study we may say that the firms finance their investment activities by retained profits are more profitable than those that finance their activities through borrowed capital and it depends on their level of investments.
Empirical Capital Structure
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Author : Christopher Parsons
language : en
Publisher: Now Publishers Inc
Release Date : 2009
Empirical Capital Structure written by Christopher Parsons and has been published by Now Publishers Inc this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Business & Economics categories.
Empirical Capital Structure reviews the empirical capital structure literature from both the cross-sectional determinants of capital structure as well as time-series changes.
