The determinants of capital structure and stock returns (the KOMPAS 100 index) (original) (raw)
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Determinants of Capital Structure
Proceedings of the International Conference on Banking, Accounting, Management, and Economics (ICOBAME 2018), 2019
This study analyses the capital structure of manufacturing companies listed on the Indonesia Stock Exchange. Capital structure is an important part of the company, because it relates to the composition of the company's debt. Investors need to know the problems of the company's capital structure, as one of the considerations in determining their investment policy. The study uses secondary data, with independent variables of profitability (Return on Equity), sales growth, asset structure, liquidity (Current Ratio), tax and business risk. As an independent variable is the capital structure (Debt to Equity Ratio). Data analysis used multiple regression analysis, while sampling was done by purposive sampling method. The results showed that liquidity (Current Ratio) had a negative effect on the significance of less than 1%. While profitability (Return on Equity), sales growth, asset structure, tax and business risk do not affect the capital structure. Keywords—profitability; sales...
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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.
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Endogenous and Exogenous Factors Affecting Capital Structure: A Theoretical Review
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Capital structure refers to the way a company finances its operations through a mix of equity and debt. The choice of capital structure has important implications for the risk and return of a firm, as well as its ability to raise funds and invest in future growth. In this theoretical review, we will examine the endogenous and exogenous factors that affect a firm's capital structure decisions. In conclusion, a firm's capital structure decisions are influenced by a complex set of endogenous and exogenous factors. By understanding these factors, firms can make informed decisions about their capital structure, balancing the trade-offs between risk, return, and growth potential.
Determinants of capital structure: new evidence from Spanish panel data
This paper analyzes the firm characteristics which are determinants of capital structure according to different explanatory theories, and how institutional characteristics affect capital structure. We have developed a target adjustment model, which has then been confirmed by our empirical evidence. It highlights the fact that the transaction costs borne by Spanish firms are inferior to those borne by US firms. Our results are consistent with tax and financial distress theories and with the interdependence between investment and financing decisions; they also provide additional evidence on the pecking order and free cash flow theories. Finally, the evidence obtained confirms the impact of some institutional characteristics on capital structure. q 2001 Elsevier Science B.V. All rights reserved.
The Effect of Capital Structure on Company Financial Performance
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This study aims to examine the effect of capital structure on the company's financial performance particularly in manufacturing companies listed on the Indonesia Stock Exchange for the 4 years period from 2014 to 2018. Capital structure is measured by Market Total Leverage (MTLEV), Market Long-Term Leverage (MLLEV) and Market Short-Term Leverage (MSLEV). On the other hand, the company's financial performance is measured by Return on Equity (ROE) and Price to Book Value (PBV). The populations in this study are manufacturing companies listed on the Indonesia Stock Exchange and the selection of samples was determined by purposive sampling method, with the final samples as many as 333 company-years. The type of data used is secondary data from IDX using multiple regression analysis methods. The results of the analysis show that the capital structure has negative and significant effect on the company's financial performance in each model.
The Impact of Capital Structure on Stock Returns: International Evidence
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This study examines the relationship between capital structure and stock returns of firms in the following eight countries in the Asia Pacific regionfor a period of 22 years from 1990 to 2012. The methodology is Panel Regression. The results indicate that the effect of capital structure depends on the nature of industry as well as market. In Australia, China, and Korea, return of companies in the Basic Material industry have negative relationship with debt to common equity. Long term debt to common equity positively affects the return of firms in Australia and Korea in the Basic Material industry.