Capital structure decisions in a period of economic intervention (original) (raw)

Financial Crisis and Capital Structure Determinants: A Study of Portuguese Listed Firms

2017

Firm’s capital structure is not a new theme but is still relevant in financial literature. This work aims to go a step further, not only because the impact of financial crisis is analyzed, but also because stock repurchase is taken into account. First, the evolution of total, long-term, and short-term debt and loans is analyzed. Then capital structure is regressed against crisis, asset structure, non-debt tax shields, profitability, size, growth, liquidity, cash flow, age, debt serving capacity, own shares, and tax rate. Using an unbalance panel of 53 Portuguese firms from 2003 until 2015, and estimating the models with fixed effects to firms, results suggest that all variables exhibit a significant impact on debt. Although the relationship and significance depend on debt’s proxy used. Results also show that short-term debt is more significant in total debt, and that crisis had a great impact, especially in loans.

Determinants of capital structure: New evidence from Portuguese small firms

Dos Algarves: A Multidisciplinary e-Journal, 2016

This paper studies the determinants of capital structure of 2,329 Portuguese small firms, decomposing total liabilities in long and short-term debt. The results of 2007-2011 panel data suggest that information asymmetry and agency problems seem to be important for small firms in accessing long-term debt. Greater size and a higher level of collateral are quite important in accessing long-term debt. Liquidity is positively associated with long-term debt, although it is negatively related to short-term debt. Higher profitability is related to lower levels of debt. When internal finance is insufficient, these firms seem to be strongly dependent on short-term debt, due to the difficulties in accessing long-term. The main conclusion of the current study is that the predicitons of POT and TOT are followed by small firms in their capital structure, which is in accordance with the results of previous studies focusing on SMEs.

Determinants of Capital Structure: Comparison of Empirical Evidence from the Use of Different Estimators

In this article we extend the comparative analysis between the results of a pooled OLS regression and the use of fixed effects panel models concerning the determinants of debt, comparing the results of using static panel models and dynamic panel estimators, including the dynamic estimator of correction of fixed effects. The results show that the differences between the results of static panel model evaluations and those of dynamic estimators are not significant, and so the results of this study are not dependent on the type of estimators used. The most profitable Portuguese companies resort less to debt, this result suggesting that Portuguese companies follow a hierarchical order concerning their sources of finance, preferring internal capital to external capital. Larger Portuguese companies resort more to debt.

The determinants of the capital structure of listed on stock market non-financial firms: Evidence for Portugal

2015

The capital structure of companies has given rise to many works of analysis of its determinants. The research has evaluated the relevance of the determinants of managers’ options when making a decision on the type of financing. The present study evaluates the effects on debt, of the determinants of capital structure, developed by the four main schools of thought in this field: the trade-off theory, pecking order theory, agency costs theory and the market timing theory. The sample consisted of the Portuguese non-financial companies listed on Euronext Lisbon index over the period 2005 to 2012. There were used the panel data and were estimated the models with fixed effects. The determinants analyzed were, namely, tangibility, profitability, other sources of tax optimization, growth opportunities, size and market valuation. Empirical results demonstrate the ability of profitability (-), growth opportunities (+), and other sources of tax optimization (+) in explaining the debt. These res...

Determinant Factors of the Capital Structure of a Firm- an Empirical Analysis

This paperwork investigates the relative importance of five factors upon the capital structure decisions of Romanian firms listed at the Bucharest Stock Exchange and operating in the construction sector of the industry. The analysis is based on panel data estimations on a sample of 20 companies, observed during three years (2009)(2010)(2011). Traditional explanatory variables are adopted in the study, including profitability, company size, tangibility of assets, liquidity and asset turnover. By employing the ordinary least squares method and the fixed effects model, simple and multiple linear regressions are obtained. These are further selected and interpreted in order to determine the influence of the independent variables upon the leverage of a company. The results show that profitability and liquidity ratios are negatively affecting the total debt ratio of Romanian companies. The tangibility of assets is also having a negative impact on leverage, strengthening the findings of previous empirical studies which claim that this indicator moves in opposite direction with the debt ratio of companies located in developing countries. On the other hand, the size of a company and its asset turnover have a positive correlation with leverage. The explanatory variable which has the highest impact on the capital structure choices is profitability.

Determinants of Capital Structure and the 2008 Financial Crisis: Evidence from Portuguese SMEs

Procedia - Social and Behavioral Sciences, 2014

This study aims to investigate the determinants of Portuguese SMEs capital structure and to examine the effects of the 2008 financial crisis on Portuguese SMEs capital structure. The sample used considers the period 2007-2010, resulting in 12,857 Portuguese SMEs. Results suggest that liquidity, asset structure and profitability are the most important determinants explaining the capital structure of Portuguese SMEs. We report a downward tendency on companies' debt ratios levels during the financial crisis.

Determinants of Corporate Capital Structure: Evidence from Non-financial Listed French Firms

2015

This paper analyses firms’ characteristics that influence managers’ decisions about how to finance their companies. It also aims to study which financial theory better explains those decisions that affect the capital structure of the firms. Our empirical study uses panel data and OLS estimations with cross-section fixed effects and year dummy variables. The sample includes 436 non-financial listed French firms, over the period from 2007 to 2013 (3052 firm-year observations). In the empirical study to test the results’ sensitivity to the use of debt with different maturities we use two regressions and hence two dependent variables: the total debt and the long term debt. The independent variables that we use are the tangibility of assets, the profitability, the firm size, the growth opportunities and the non-debt tax shields. All independent variables exhibit explanatory power and the results are robust to the use of debt with different maturities. The empirical results show that ther...

Firm size and capital structure: evidence using dynamic panel data

Applied Economics, 2012

This paper suggests that the validity of the trade-off (TOT) and pecking-order (POT) theories in explaining financing decisions varies among small, medium and large firms. Using dynamic panel data tests in a sample of 3,439 Spanish firms over the period 1995-2003, results are partially consistent with both explanations but suggest a greater validity of pecking-order predictions for small firms. In small firms, the negative influence of profitability and the positive influence of investment opportunities and of intangible assets on firm debt predicted by the POT are heightened. However, no differences are observed between small and large firms in their speed of adjustment to the target leverage as suggested by the TOT.

The Determinants of Capital Structure

This study analyses the factors that may influence the capital structure decisions of Romanian traded firms. The sample includes 776 firms, all listed firms on Bucharest stock exchange in the period from 2003-2012. All debt ratios, short-term, long-term and total debt, were included in this analysis in order to understand better capital structure decisions. The factors with possible impact in capital structure included in this study are the most common in the capital structure literature, namely asset tangibility, size, profitability, liquidity, interest rate, industry and taxes. The empirical results for the whole sample show that the most important factors which influence the capital structure of Romanian traded firms are tangibility, profitability, liquidity and size. The impact of these factors for all debt ratios is negative, except for the influence of tangibility in long-term debt which is positive. The impact of interest rate and tax is not statistically significant for all debt ratios. Industry type is statistically significant for long-term debt ratio with a negative influence. The second regression analysis including large firms indicates that industry type, interest rate, tangibility, profitability and liquidity have a negative influence on debt ratios while size and tax impact positively on the leverage.

Determinants of Company Capital Structure

Proceedings of the 3rd International Conference on Banking, Accounting, Management and Economics (ICOBAME 2020), 2020

This study aims to prove empirically that sales growth, profitability, asset structure, business risk, financial risk, tax, Firm growth and firm size are determinants of the capital structure decisions of companies incorporated in the LQ45 index on the Indonesia Stock Exchange. The sample was taken using purposive random sampling, and the collected panel data were analyzed using panel data regression. The results showed that the independent variables that had a significant effect on the capital structure proxied by the debt to asset ratio (DAR) were: sales growth, profitability, asset structure, and firm size