Relationship between factors of capital structure

This article aims to evaluate the relative importance of the industry-specific factors and the size- specific factors in relation to their impact on the corporate capital structure in certain countries of the european union the first, theoretical part of the study provides a literature review on the industry and the size as capital. Examined factors that affect the debt ratio for both multinational cor- porations ( mncs) and domestic corporations (dcs) however, the incremental explanatory power and the direct effect of the extent of international activities on capital structure have not been tested this paper uses multiple regression analyses to add. Pressure and should be seriously taken into account for determining the factors impacting the efficiency of the finance decisions the trade-off theory of product market and manufacturing elements is one of the theories related to the capital structure based on this theory, there is a direct relationship between the. Industrial firms in kenya his objective was to find out the factors that motivate management of industrial firms in choosing their capital structure the research found out that industrial firms are more likely to follow a financing hierarchy than to maintain a target-debt to equity ratio, and that the models based on corporate and. Are the most significant determining factors for adopting a capital structure in both domestic and foreign firms while, inflation is particular to domestic firms only the results also show that for short-term debt ratio (std/ta), non-debt tax shield again is a significant explanatory factor along with tangibility and exchange rate at. Within the european union for ten years during 2003-2012 to identify factors that affect capital structure a literature review is conducted to be able to analyse the regressions of the quantitative method the dependent variable is leverage and the independent variables are size, return on equity, price-to-sales ratio, return,. Finally, the results of the reduced form equations show that capital structure and dividend policy have the following common factors: profitability asset tangibility market‐to‐book industry classification and limited evidence of institutional ownership therefore, the determinants of capital structure and.

Are the size and structure of their financial markets important factors to explain any cross-country differences on sme capital structure to answer these questions we apply panel data methods to the sample of firms for the period 1998 to 2002 we assess the extent to which the debt to assets ratio of firms depends upon. We also investigate how firm-specific factors such as profitability, firm size, tangibility of assets and depreciation to total assets along with the macroeconomic factor such as inflation influence the modigliani and miller ( 1958) have pioneered research on the capital structure and its relation to firm value. The overall goal is to investigate the influence of the capital structure on the investment decisions of the managers of the firms, but therefore the following sub -questions have to be answered: • what is the expected relationship between leverage and investment decisions of firms based on earlier research • which factors.

Direction of the influence of the selected microeconomic factors on the capital structure of the enterprises belonging to the construction industry and quoted on the newconnect share market it is in order to accomplish this objective that the correlation analysis and the linear regression methods were applied 2 the concept. Decisions that a firm has to take this is because of the fact that capital structure affects the cost of capital, net profit, earning per share, dividend payout ratio and liquidity position of the firm these variables coupled with a number of other factors determine the value of a vol 21, no 3, july-september 1996. The main objective of this paper is to analyze the factors determining the capital structure of indian companies this analysis is grounded on agency theory and pecking order theory the paper takes into consideration dependent variable being debt equity ratio and independent variables viz size, growth,.

This paper applies factor analysis to analyze the relationship between capital structure and financial performance of real estate listed companies in shanghai stock exchange from 2010 to 2012, which concludes that the capital structure of real estate listed companies is negatively related to its financial performance, and. In relation to the effects that the characteristics of countries can exert on the capital structure of multinationals, some studies, such as the ones by,, and can as intrinsic factors to countries, such as political-legal risks, the system of protection for creditors and investors, and the development of the capital market that may. One such difference is capital structure appears under the head shareholders fund and non-current liabilities there are certain factors which are referred while choosing the capital structure like, the pattern opted for capital structure should reduce the cost of capital and increase the returns, the capital. Academe, and one direction is to take the mm theory as the center and mainly discuss the relationship between the enterprise value and the capital structure, and the other direction is to mainly research various factors influencing the enterprise capital structure, which belongs to the decisive factor school of capital structure.

Relationship between factors of capital structure

The primary factors that influence a company's capital-structure decision are: 1 business risk excluding debt, business risk is the basic risk of the company's operations the greater the business risk, the lower the optimal debt ratio as an example, let's compare a utility company with a retail apparel company a utility.

  • Capital structure decision is the vital one since the profitability of an enterprise is directly affected by such decision the determination of a company's capital structure constitutes a difficult decision, one that involves several and antagonistic factors, such as risk and profitability that decision becomes even more difficult,.
  • Factors affecting capital structure choice: new evidence from turkish non- financial listed factors behind capital structure choices of companies have been investigated intensively since the seminal paper of modigliani and miller in 1958 relation between leverage and independent variables such as tangibility of.
  • Moderating variable on the relationship between profitability and firm's growth and capital structure, especially for the insurance industry in kenya this study seeks to explore how the capital structure is set and the influence of firm management control as a moderating factor may have on the capital structure of the insurance.

Keywords: capital structure, cost of capital, value 1 introduction capital budgeting and financing are the two closely related major decision making areas of financial managers in modern time corporations these decisions are supposed to maximize company's value for shareholders the key factor in capital budgeting. We study the link between social ratings of firms and their financial structure from 1999 to 2007 equation (1) shows that the discounted factor in the denominator includes the banking rate adjusted for an sr premium we can size is an intensively used variable in studies dealing with debt policy explanatory factors. Structure of a company reflects the debt to equity ratio in the financing choice we distinguish between capital and financial structure, which besides long-term debt, includes short-term debt as well (nistor, 2004) in the specialized literature, the factors that affect the capital structure of a firm are classified into two categories:.

relationship between factors of capital structure Company's capital structure is unreasonable in china, the interactive relationship between capital structure and corporate performance in smes should combine the actual situation of china's gem listed companies from previous studies, we can see that the capital structure is an important factor affecting.
Relationship between factors of capital structure
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