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Showing papers on "Capital structure published in 2020"


Journal ArticleDOI
01 Nov 2020
TL;DR: In this article, the authors adopt a systematic literature review methodology along with bibliometric, network, and content analysis on a sample of 262 studies taken from the Web of Science database to examine the research activities that have taken place on this topic.
Abstract: Capital structure is the outcome of market conditions, financial decisions taken by the firm, and credit rationing of fund providers. Research on the capital structure of small and medium enterprises (SMEs) has gained momentum in recent years. The present study aims to identify key contributors, key areas, current dynamics, and suggests future research directions in the field of the capital structure of SMEs. This paper adopts a systematic literature review methodology along with bibliometric, network, and content analysis on a sample of 262 studies taken from the Web of Science database to examine the research activities that have taken place on this topic. Most influential papers are identified based on citations and PageRank, along with the most influential authors. The co-citation network is developed to see the intellectual structure of this research area. Applying bibliometric tools, four research clusters have been identified and content analysis performed on the papers identified in the clusters. It is found that the major research focus in this area is around theory testing—mainly, pecking order theory, trade-off theory, and agency theory. Determinants of capital structure, trade credit, corporate governance, and bankruptcy are also the prominent research topics in this field. Also, this study has identified the research gaps and has proposed five actionable research directions for the future.

76 citations


Journal ArticleDOI
TL;DR: The authors examined the short run evolution of firms' capital structures following the start of the global financial crisis and its immediate aftermath, comparing the experience of already levered SMEs, large non-listed firms, and listed companies.

72 citations


Journal ArticleDOI
TL;DR: In this paper, the importance of skilled labor and the inalienability of human capital expose firms to the risk of losing talent in critical times using Swedish micro-data, and firms lose workers with the highest cognitive and non-cognitive skills as they approach bankruptcy.
Abstract: The importance of skilled labor and the inalienability of human capital expose firms to the risk of losing talent in critical times Using Swedish micro-data, we document that firms lose workers with the highest cognitive and noncognitive skills as they approach bankruptcy In a quasi-experiment, we confirm that financial distress is driving these results: following a negative export shock caused by exogenous currency movements, talent abandons the firm, but only if the exporter is highly leveraged Consistent with talent dependence being associated with higher labor costs of financial distress, firms that rely more on talent have more conservative capital structures

70 citations


Journal ArticleDOI
TL;DR: In this paper, the authors exploit Australia's ratification of the Kyoto Protocol, which mandates the country to reduce carbon emissions, thereby exposing Australian firms to increased carbon risk, as a quasi-natural experiment to examine the causal effect of carbon risk on firm capital structure.

70 citations


Journal ArticleDOI
TL;DR: In this article, the impact of a chief executive officer's (CEO) personal and organizational characteristics on firm performance in the context of a developing country and to explore whether capital structure mediates the relationship between CEO characteristics and firm performance.
Abstract: The purpose of this paper is to empirically capture the impact of a chief executive officer’s (CEO) personal and organizational characteristics on firm performance in the context of a developing country and to explore whether capital structure mediates the relationship between CEO characteristics and firm performance.,In order to test the hypothesized model, CEO duality, tenure and personal characteristics (age, gender and education) were taken as explanatory variables to study their impact on firm performance. Data were collected from 179 Pakistani companies from 2009–2015. The collected data were processed via panel data regression analysis under fixed effect assumptions.,Results show that CEO duality has a negative impact on firm performance and that a CEO with a dual role is more inclined toward debt financing. Moreover, a CEO with a longer tenure tends to be opportunistic and prioritize his/her personal interest while making strategic financial decisions, thus creating agency costs for the firm. Furthermore, CEO characteristics like age, gender and education have significant effects on firm financial decisions and firm performance. Finally, the debt and equity ratio partially mediates the link between CEO characteristics and firm performance.,The findings of this study have limited generalizability due to the specific nature of the sample characteristics.,To the best of the authors knowledge, this study is the first to explore the impact of CEO characteristics on capital structure and firm performance. This work is also the first to explore the mediating role of capital structure in the relationship between CEO characteristics and firm performance by using Pakistani data.

62 citations


Journal ArticleDOI
TL;DR: In this paper, the impact of board size and board independence on the effect of gender diversity on a firm's board structure on firm's financing decisions has been examined in the context of non-financial listed firms in Palestine.
Abstract: Motivated by the agency theory, this study aims to empirically examine the nexus between board attributes and a firm’s financing decisions of non-financial listed firms in Palestine and how the previous relationship is moderated and shaped by the level of gender diversity.,Multiple regression analysis on a panel data was used. Further, we applied three different approaches of static panel data “pooled OLS, fixed effect and random effect.” Fixed-effects estimator was selected as the optimal and most appropriate model. In addition, to control for the potential endogeneity problem and to profoundly analyze the study data, the authors perform the one-step system generalized method of moments (GMM) estimator. Dynamic panel GMM specification was superior in generating robust findings.,The findings clearly unveil that all explanatory variables in the study model have a significant influence on the firm’s financing decisions. Moreover, the results report that the impact of board size and board independence are more positive under conditions of a high level of gender diversity, whereas the influence of CEO duality on the firm’s leverage level turned from negative to positive. In a nutshell, gender diversity moderates the effect of board structure on a firm’s financing decisions.,This study was restricted to one institutional context (Palestine); therefore, the results reflect the attributes of the Palestinian business environment. In this vein, it is possible to generate different findings in other countries, particularly in developed markets.,The findings of this study can draw responsible parties and policymakers’ attention in developing countries to introduce and contextualize new mechanisms that can lead to better monitoring process and help firms in attracting better resources and establishing an optimal capital structure. For instance, entities should mandate a minimum quota for the proportion of women incorporation in boardrooms.,This study provides empirical evidence on the moderating role of gender diversity on the effect of board structure on firm’s financing decisions, something that was predominantly neglected by the earlier studies and has not yet examined by ancestors. Thereby, to protrude nuanced understanding of this novel and unprecedented idea, this study thoroughly bridges this research gap and contributes practically and theoretically to the existing corporate governance–capital structure literature.

51 citations


Journal ArticleDOI
TL;DR: In this article, the impact of capital structure on firm performance in the context of Vietnam was investigated and the empirical results showed that capital structure has a statistically significant negative effect on the firm performance.
Abstract: This paper explores the impact of capital structure on firm performance in the context of Vietnam. The paper investigates the different effect of capital structure on firm performance in state-owned and non-state enterprises listed on the Vietnam stock market. The panel data of research sample includes 488 non-financial listed companies on the Vietnam stock market for a period of six years, from 2013 to 2018. The Generalized Least Square (GLS) is employed to address econometric issues and to improve the accuracy of the regression coefficients. In this research, firm performance is measured by return on equity (ROE), return on assets (ROA), and earnings per share (EPS). The ratios of short-term liabilities, long-term liabilities, and total liabilities to total assets are proxy for capital structure. Firm sizes, growth rate, liquidity, and ratio of fixed assets to total assets are control variables in the study. The empirical results show that capital structure has a statistically significant negative effect on the firm performance. The result also shows this effect is stronger in state-owned enterprises than non-state enterprises in Vietnam. These evidences provide a new insight to managers of both state-owned and non-state enterprises on how to improve the firm’s performance with capital structure.

45 citations


Journal ArticleDOI
TL;DR: Based on the KLEMS framework, the authors analyzes the relationship between environmental regulation, factor substitution, and energy-saving effect by using panel structure vector autoregression model and panel data of China industry from 2004 to 2014.

45 citations


Journal ArticleDOI
TL;DR: This paper found that customer satisfaction affects different dimensions of firm financial performance, and a managerially important but overlooked aspect is its effect on a firm's financial performance (e.g., revenue and profit).
Abstract: Although scholars have established that customer satisfaction affects different dimensions of firm financial performance, a managerially important but overlooked aspect is its effect on a firm’s fu...

44 citations


Journal ArticleDOI
TL;DR: In this paper, the authors examined the influence of corporate governance characteristics on corporate sustainability performance, considering three dimensions of sustainability: economic, environmental and social, in the macroeconomic environment of the Iberian Peninsula.
Abstract: In the macroeconomic environment of the Iberian Peninsula, this paper aims to examine the influence of corporate governance characteristics on corporate sustainability performance. The purpose of this paper is to address corporate practices while determining which corporate governance characteristics can improve corporate sustainability, considering, for this purpose, three dimensions of sustainability: economic, environmental and social.,This sample comprises 99 non-financial companies of the Iberian Peninsula, during the 2013–2017 period. The authors have used the panel data methodology, specifically the generalized method of moments (GMM) estimation method proposed by Arellano and Bover (1995) and Blundell and Bond (1998) to test the hypotheses formulated.,The results obtained have shown that corporate sustainability performance is affected differently depending on the sustainability dimension that is considered. Specifically, the economic dimension is determined by public debt, the board size, board diversity and the existence of an audit committee. Regarding the environmental dimension, the board size and the presence of the audit committee, as well the corporate social responsibility committee, are the most important determinants. Finally, the social dimension was influenced by the board size, audit committee and the control variable of capital structure, which means that in this dimension, the sources of financing used by the company also help in determining its levels of social concern.,To the best of the authors’ knowledge, this is the first time that a study has been carried out in the Iberian Peninsula on the corporate sustainability using GMM-system model for three dimensions of sustainability. Corporate sustainability depends on external and internal factors of companies. Therefore, regulators and managers should realize that they will have to be more effective in their statements.

42 citations


Journal ArticleDOI
TL;DR: In this paper, the authors investigate how the recent global financial crisis impacted SMEs' capital structure decisions and their determinants, showing that credit supply shocks negatively impacted Italian SMEs’ leverage.
Abstract: Based on a unique dataset of Italian small- and medium-sized enterprises (SMEs) over the 2006–2016 period, we investigate how the recent global financial crisis impacted SMEs’ capital structure decisions and their determinants. Our results show that credit supply shocks negatively impacted Italian SMEs’ leverage. During and after the crisis, Italian SMEs significantly decreased their leverage, particularly their short-term debt exposure, relative to the pre-crisis period. As a result, the short-term debt channel is more sensitive to credit conditions than the long-term debt channel. Interestingly, we also show that trade credit does not compensate for the reduction in bank credit. Finally, our findings reveal that riskier and more profitable firms reduced their leverage more during the crisis than during the pre-crisis period. Implications for firms and policymakers are discussed.

Journal ArticleDOI
TL;DR: In this paper, the authors discuss one more limitation of the Modigliani-Miller theory: a method of tax on profit payments, which leads to a large underestimation of the WACC of a company and a large overestimation of its capitalization.
Abstract: The first serious study (and first quantitative study) of influence of capital structure of the company on its indicators of activities was the work by Nobel Prize Winners Modigliani and Miller Their theory has a lot of limitations One of the most important and seriouse assumptions of the Modigliani – Miller theory is that all financial flows as well as all companies are perpetuity This limitation was lift out by Brusov–Filatova–Orekhova in 2008 (Filatova et al 2008), who have created BFO theory – modern theory of capital cost and capital structure for companies of arbitrary age Despite the fact that the Modigliani–Miller theory is currently a particular case of the general theory of capital cost and capital structure – Brusov–Filatova–Orekhova (BFO) theory – it is still widely used at the West In current paper we discuss one more limitation of Modigliani – Miller theory: a method of tax on profit payments Modigliani – Miller theory accounts these payments as annuity–immediate while in practice these payments are making in advance and thus should be accounted as annuity–due We generalize the Modigliani–Miller theory for the case of advance payments of tax on profit, which is widely used in practice, and show that this leads to some important consequencies, which change seriously all the main statements by Modigliani and Miller These consequencies are as following: WACC starts to depend on debt cost kd, WACC turns out to be lower than in case of classical Modigliani–Miller theory and thus company capitalization becomes higher than in ordinary Modigliani–Miller theoryWe show that dependence of equity cost on leverage level L is still linear, but the tilt angle with respect to L–axis turns out to be smaller: this could lead to modification of the divident policy of the company Correct account of a method of tax on profit payments demonstrates that shortcomings of Modigliani – Miller theory are dipper, than everybody suggested: the underestimation of WACC really turns out to be bigger, as well as overestimation of the capitalization of the company This means that systematic risks arising from the use of modified Modigliani – Miller theory (MMM theory) (which is more correct than "classical' one) in practice are higher than it was suggested by the "classical" version of this theory

Journal ArticleDOI
01 Aug 2020-Heliyon
TL;DR: The results indicate that the capital structure debt to equity variable has anegative and significant relationship with financial performance while the asset turnover ratio and firm performance showed a negative and statistically insignificant relationship.

Journal ArticleDOI
TL;DR: Wang et al. as discussed by the authors examined the relationship among corporate governance, ownership structure and capital structure, and found that better-governed companies in the real estate sector tend to have better capital structure.
Abstract: This paper aims to contribute to the existing capital structure and board structure literature by examining the relationship among corporate governance, ownership structure and capital structure.,The paper uses a panel data of 595 firm-year observations from a unique and comprehensive data set of 119 Chinese real estate listed firms from 2014 to 2018. It uses fixed effect and random effect regression analysis techniques to examine the hypotheses.,The results show that the board size, ownership concentration and firm size have positive influences on capital structure. State ownership and firm profitability have inverse influences on capital structure.,The findings suggest that better-governed companies in the real estate sector tend to have better capital structure. These findings highlight the unique Chinese context and also offer regulators a strong incentive to pursue corporate governance reforms formally and jointly with the ownership structure. Finally, the results suggest investors the chance to shape detailed expectations about capital structure behavior in China. Future research could investigate capital structure using different arrangement, conducting face-to-face meetings with the firm’s directors and shareholders.,The findings offer support to corporate managers and investors in forming or/and expecting an optimal capital structure and to policymakers and regulators for ratifying laws and developing institutional support to improve the effectiveness of corporate governance mechanisms.,This paper extends, as well as contributes to the current capital structure and corporate governance literature, by proposing new evidence on the effect of board structure and ownership structure on capital structure. The results will help policymakers in different countries in estimating the sufficiency of the available corporate governance reforms to improve capital structure management.

Journal ArticleDOI
TL;DR: Li et al. as mentioned in this paper examined whether CSR affects a firm's cost of equity and debt capital in China and showed that Chinese firms with higher CSR performance can rapidly reduce their cost of debt capital.
Abstract: Firms in China with higher corporate social responsibility (CSR) performance may not substantially reduce their cost of equity capital versus firms in developed countries. To compare the different capital structures between developing and developed countries, this study examines whether CSR affects a firm's cost of equity and debt capital in China. Our results show that Chinese firms with higher CSR performance can rapidly reduce their cost of debt capital. When we use capital structure (CS) as a moderator to evaluate the relationship between CSR and the cost of capital, the findings present that CS does not play a moderating role. The CSR value curve indicates that CSR investment by Chinese firms is still at legal and compliant levels, incurring more information asymmetry and less market efficiency in the country's financial sector.

Journal ArticleDOI
TL;DR: The authors found a strong positive relation between identifiable intangible assets and leverage, showing that identifiable assets support debt financing as much as tangible assets do, in particular in firms that lack abundant tangible assets.
Abstract: A substantial and increasing proportion of corporate assets consists of intangible assets. Despite their growing importance, internally-generated intangible assets are largely absent from balance sheets and other corporate reports. Consequently, the empirical capital structure research has struggled to evaluate the effects of intangible assets on financial leverage. High valuation risk and poor collateralizability of some intangible assets — e.g. goodwill, may discourage debt financing. In contrast, identifiable intangible assets may support debt because they are separately identifiable, valuable, and potentially collateralizable, and are instrumental in generating cash flows. Utilizing a recent accounting rule change that allows us to observe granular market-based valuations of intangible assets, we find a strong positive relation between identifiable intangible assets and leverage. Overall, identifiable intangible assets support debt financing as much as tangible assets do, in particular in firms that lack abundant tangible assets.

Journal ArticleDOI
TL;DR: In this article, the authors determined the effect of profitability and liquidity on firm value and determined the role of capital structure in mediating the impact of profitability on the firm value in the construction and building sub-sector companies listed on the IDX for the period 2013-2017.
Abstract: This study aims to determine the effect of profitability and liquidity on firm value and determine the role of capital structure in mediating the effect of profitability and liquidity on firm value in the construction and building sub-sector companies listed on the Indonesia Stock Exchange (IDX) for the period 2013-2017. The population in this study are construction and building sub-sector companies that are listed on the Indonesia Stock Exchange and have complete financial statements for the period 2013-2017. This study uses samples with the census method. The data analysis technique used is path analysis. Profitability has a positive and significant effect on capital structure, Liquidity has a negative and significant effect on capital structure, capital structure has a positive and significant effect on firm value, profitability has a positive and significant effect on firm value, liquidity has a negative and not significant effect on firm value and capital structure is able to mediate the effect of profitability and liquidity on firm value.

Journal ArticleDOI
01 Jan 2020
TL;DR: In this article, the authors examined the impact of human capital, capital structure choice and firm profitability of 48,673 Vietnamese construction firms in 2016 and found that using more debt in capital structure would positively increase the performance of the firm but this positive effect was increasingly declining.
Abstract: Article history: Received October 14 2019 Received in revised format November 21 2019 Accepted November 21 2019 Available online November 21 2019 The paper aims to examine the impact of human capital, capital structure choice and firm profitability of 48,673 Vietnamese construction firms in 2016. Measuring firm profitability by return on assets (ROA) or return on equity (ROE), the results demonstrated that using more debt in capital structure would positively increase the performance of the firm but this positive effect was increasingly declining. Moreover, evidence showed that human capital had a positive impact on the result of business activities. A larger size of a firm could positively boost firm performance. Regarding firm location, a firm locating in the metropolitan of Ho Chi Minh City had a higher level of performance than a firm locating in the metropolitan of Hanoi capital. Finally, operating status of the firm as well as the establishment of industrial park had insignificant impacts on firm profitability. by the authors; licensee Growing Science, Canada 20 © 20

Journal ArticleDOI
TL;DR: In this article, the authors exploit the staggered adoption of the universal demand (UD) laws across U.S. states, which impedes shareholder rights to initiate derivative lawsuits, as a quasi-natural experiment to examine the relation between shareholder litigation rights and firm capital structures.

Journal ArticleDOI
TL;DR: In this paper, the use of unsecured debt, which contains standardized covenants that place limits on total leverage and use of secured debt, is associated with lower leverage outcomes and the firm value is sensitive to leverage levels.
Abstract: Using equity REIT data, we show empirically that the use of unsecured debt, which contains standardized covenants that place limits on total leverage and the use of secured debt, is associated with lower leverage outcomes. We then show that firm value is sensitive to leverage levels, where lower leverage is associated with higher firm value. In the presence of weak managerial governance, our results suggest that unsecured debt covenants function as a managerial commitment device that preserves the firm's debt capacity to enhance financial flexibility. This article is protected by copyright. All rights reserved

Journal ArticleDOI
TL;DR: In this article, the authors examined the determinants of capital structure using a dataset of firms in Malaysia and carried out a panel data analysis of 8,270 observations from 827 listed non-financial firms on the Malaysia stock market over the period 2008-2017.
Abstract: The purpose of this paper is to examine the determinants of capital structure using a dataset of firms in Malaysia.,This paper carries out a panel data analysis of 8,270 observations from 827 listed non-financial firms on the Malaysia stock market over the period 2008–2017. To estimate the model and analyse the data collected from the DataStream and World Bank databases, the authors use static panel estimation techniques as well as two-step difference and system dynamic GMM estimator.,The results show that profitability, growth opportunity, tax-shield, liquidity and cash flow volatility have a negative and significant impact on debt measures. However, the effects of collateral, non-debt tax and earnings volatility on measures of debt are positive and significant. In addition, firm size, firm age, inflation rate and interest rate are important determinants of the present value of debt. The results also show a significant inverse U-shaped relationship between the firm's age and its capital structure. In general, the results support the proposition advocated by the pecking order and trade-off theories.,The results of this study necessitate formulation of various policy measures that can counter the effects of debt on firms.,The present study is among the earliest to use both the book and market value measures of capital structure. It also uses three proxies for each: total debt, long-term debt and short-term debt. It incorporates earning volatility and cash flow volatility as new independent variables in the model. These variables have not previously been used together with both book and market value measures of capital structure. The study also examines the non-monotonic relationship between firm's age and capital structure using a quadratic regression method. It applies both static panel techniques and dynamic GMM estimation techniques to analyse the data.

Journal ArticleDOI
TL;DR: The authors analytically show how firm characteristics shape the optimal contract and the horizon of corporate policies, thereby generating a number of novel empirical predictions on the optimality of short versus long-termism.

Journal ArticleDOI
27 Feb 2020-PLOS ONE
TL;DR: The findings reveal that the governance structure of firms with BOD, independent director, institutional investors, audit committee and female directors accelerates its performance, and the leverage ratio improves accounting performance, but it has a downward impact on the share prices of listed firms.
Abstract: A superlative combination of the Board of Directors (BOD) with diverse members is considered a sign of a good governance structure. Meanwhile, the key decision taken by BOD to make organizations profitable is the capital structure with the optimal mix of debt and equity. Unfortunately, previous literature has reported this relationship with a mixed trend, which may be due to research gaps in the statistical analysis. Moreover, it also shows that the relationship between them has not yet been fully predicted and can still be completely understood. This study contains time-variant and time-invariant variables, and these variables usually have an outlier’s problem. As we know that the OLS estimators are more sensitive to react adversely to this problem, yet we have not received enough evidence from similar researches that cares about it. Consistent with these arguments, this study focuses primarily on exploring the influence of corporate governance structure and the capital structure on firms' market-oriented and accounting-based performance, especially with the contemplation of outliers. Hypotheses have been evaluated using M-estimators and S-estimators of robust regression for 45 listed firms for the period from 2013 to 2017. The findings reveal that the governance structure of firms with BOD, independent director, institutional investors, audit committee and female directors accelerates its performance. Further, we find that the leverage ratio improves accounting performance, but it has a downward impact on the share prices of listed firms. Our study contributes to the prevailing literature by proving that the kind of governance structure that based on diverse expert members and a capital structure with a high volume of debt is of utmost importance to the performance of firms as a whole.

Journal ArticleDOI
TL;DR: Similar to the human nervous system, AI systems in finance/treasury must manage data quickly and accurately, including the capture and classification of data and its integration into larger datasets.
Abstract: Artificial intelligence poses a particular challenge in its application to finance/treasury management because most treasury functions are no longer physical processes, but rather virtual processes that are increasingly highly automated. Most finance/treasury teams are knowledge workers who make decisions and conduct analytics within often dynamic frameworks that must incorporate environmental considerations (foreign exchange rates, GDP forecasts), internal considerations (growth needs, business trends), as well as the impact of any actions on related corporate decisions which are also highly complex (e.g., hedging, investing, capital structure, liquidity levels). Artificial intelligence in finance and treasury is thus most analogous to the complexity of a human nervous system as it encompasses far more than the automation of tasks. Similar to the human nervous system, AI systems in finance/treasury must manage data quickly and accurately, including the capture and classification of data and its integration into larger datasets. At present, the AI network neural system has been gradually improved and is widely used in many fields of treasury management, such as early warning of potential financial crisis, diagnosis of financial risk, control of financial information data quality and mining of hidden financial data, information, etc.

Journal ArticleDOI
TL;DR: In this paper, the authors tried to reconcile the overall picture of the impact of strategic decisions on capital structure by estimating the effect brought about by the three strategies determined at the corporate level: internationalization, diversification and integration.

Journal ArticleDOI
TL;DR: In this article, the authors examined the potential impacts of the ESG disclosure and ownership structure on the cost of capital by using a sample of 30 companies listed on the UAE financial markets during the period 2010-2019.
Abstract: The capital structure decision is one of the most vital financial decisions of the corporation that consists of determining the optimal combination of equity and debt for the companies that would reduce the cost of capital. The examination of the capital structure has always gained importance especially in the theoretical and empirical studies while there is no study of the relationship between the environmental, social, and governance (ESG), the ownership structure, and the cost of capital. In this context, this paper aims to examine the potential impacts of the ESG disclosure and ownership structure on the cost of capital by using a sample of 30 companies listed on the UAE financial markets (Abu Dhabi Stock Exchange and Dubai Financial Market) during the period 2010–2019. The data show that there is an increasing trend in the different non-financial corporate disclosures. The empirical results of various models show that the ESG disclosure, the insider and the institutional ownerships have negative and significant impacts on the cost of capital. Furthermore, the environmental and the governance disclosures reduce the cost of capital. This paper demonstrates the strong role played by the ESG disclosure and the ownership structure in reducing the cost of capital for the companies. These results would encourage the companies in implementing the best practices of the non-financial disclosures and regulating their corporate governance mechanisms.

Journal ArticleDOI
TL;DR: In this article, the authors analyzed the Portuguese companies' determinants of capital structure and found that the capital structure decisions depend on a set of firm-specific factors, and that the effects of the determinants on the debt maturity ratios differ according to the type of firm, and the economic cycle.
Abstract: This paper aims to analyse the Portuguese companies’ determinants of capital structure. To reach this objective, the authors used data from 37 non-financial Portuguese large enterprises and from 4,233 non-financial small and medium enterprises for the period 2010-2016. Additionally, the authors selected a sub-period from 2010 to 2014 for a deeper understanding of the impact of the sovereign debt crisis and the Economic Adjustment Programme of Troika on the capital structure of those companies.,Three dependent variables were tested according to debt maturity, and a dynamic panel data model, namely, the generalised method of moments system estimator, was used to test the formulated research hypotheses following Arellano and Bover (1995) and Blundell and Bond (1998) to capture the dynamic nature of the firm’s capital structure decisions.,In general, the results point out that the capital structure decisions depend on a set of firm-specific factors, and that the effects of the determinants of the debt maturity ratios differ according to the type of firm, i.e. large/small firms, and the economic cycle.,To the best of the authors’ knowledge, this is the first study that has been carried out in Portugal by using two samples of large and small companies for analysing the effects of the Economic Adjustment Programme of Troika on the capital structure of companies. The authors seek to understand which type of companies suffered more because of the effects of the Economic Adjustment Programme of Troika during this period, and which are the capital structure determinants that present greater change. Contrary to what might be expected, large companies are the firms that suffer most from the Economic Adjustment Programme. Probably, because these companies are the most immediate, most scrutinised and those that must show abroad that the bank did not fund them in the long term, because of the imposition and limits to grant credit faced by the banks themselves.

Journal ArticleDOI
TL;DR: For example, the authors found that unconditional and conditional accounting conservatism help lower bankruptcy risk in U.S. listed firms. And they further found that the mitigating effect of accounting cons...
Abstract: For a large sample of U.S. listed firms, we find that unconditional and conditional accounting conservatism help lower bankruptcy risk. We further find that the mitigating effect of accounting cons...

Journal ArticleDOI
TL;DR: In this paper, the authors examined the role of profitability as a mediating variable in influencing firm value and found that profitability acts as an intervening variable in mediating the relationship between firm size and firm value.
Abstract: The purpose of this study was to examine the role of profitability as a mediating variable in influencing firm value. This study uses a sample of manufacturing companies listed on the Indonesia Stock Exchange from 2016 to 2018. The data used is panel data, with data analysis using multiple regression. Based on the Sobel test, profitability plays a role in mediating the effect of firm size on firm value. The effect of firm size on firm value is indirect, however, through profitability. Therefore, the market price of the shares of large-scale companies will increase if the resulting profitability is high. The capital structure and managerial ownership directly influence firm value. The results showed that managerial ownership and firm size had a positive effect on profitability, while capital structure had no effect on profitability. Capital structure and managerial ownership have a negative effect on firm value, while firm size and profitability have a positive effect on firm value. The main finding of this study is that profitability acts as an intervening variable in mediating the relationship between firm size and firm value.

Journal ArticleDOI
TL;DR: This article found that managers select financial policies partially by mimicking policies of peer firms, and that mimicking correlates to higher financing costs and lower future profitability, especially if it results in high leverage.
Abstract: Growing evidence suggests that managers select financial policies partially by mimicking policies of peer firms. We find that these peer effects in capital structure choice are unique to firms operating under weak external corporate governance. Cross‐sectional tests suggest that this finding is best explained by a quiet life hypothesis in which managers may be able to avoid the effort required to optimize financial policies and the scrutiny of market participants. Leverage ratios of mimicking firms display less sensitivity to a profitability shock. Finally, mimicking correlates to higher financing costs and lower future profitability, especially if it results in high leverage.