This study investigates capital structures of Australian firms in relation to firm characteristics. Using an unbalanced panel of 367 firms observed over a 15‐year period from 1992 to 2006, our panel data regression results show that debt–asset ratio is positively related to asset tangibility but inversely related to growth prospects and business risk measured by unlevered beta of equity. We also find that although levered firms are generally more profitable than unlevered firms, profitability decreases the debt ratio of levered firms. We do not find that firm size affects the capital structure of Australian firms. These results are consistent with the pecking order and the agency cost theories but contradict the trade‐off theory.Capital Structure, Asset Tangibility, Growth, Business Risk, Profitability, G32,

No abstract

No abstract

Purpose -US studies show significant price effects when shares enter or leave an index during index revisions. Studies on other markets generally yield similar results with smaller price reactions. This study aims to examine the price effects resulting from revisions to the Australian S&P/ASX 100 and 300 indices. Design/methodology/approach -The event study methodology is used to examine abnormal price and volume effects around the announcement dates and implementation dates of index revisions. Findings -In contrast with studies on US index changes, this study shows no abnormal returns for additions to or deletions from the S&P/ASX 100 index and only a weak effect for the S&P/ASX 300, which showed a median abnormal return of þ 1.06 per cent on the implementation date for additions and À2.78 per cent for deletions. Research limitations/implications -These results give a cautionary warning to those who wish to speculate on the changes to index constituents on the Australian market, or other similar markets where the strength of the index effect has not been clearly quantified. Originality/value -This study adds to the body of knowledge on the index effect by providing Australian evidence.

No abstract