An additional analysis of estimation techniques for the degree of financial leverage

Abstract

This study compares three different empirical proxies for the financial leverage component of a systematic risk‐composition model employed in prior financial research. We consider one static accounting measure and two elasticity‐based measures. We find that the traditional static accounting measure of financial leverage provides statistically different estimates of financial leverage when compared to estimates from elasticity‐based measures of the degree of financial leverage. The findings are important because the elasticity‐based models for the degree of financial leverage have clear theoretical links to market‐based models of systematic risk, while the static accounting measure of financial leverage does not. Practitioners and researchers should carefully consider why they are estimating financial leverage and choose the appropriate method for doing so given the goals and potential consequences for biased estimation.

Determinan Struktur Modal Dan Nilai Perusahaan Manufaktur Di Bursa Efek Indonesia

“…The market risk variable has an insignificant negative effect on the capital structure of manufacturing companies listed on the Indonesia Stock Exchange with a coefficient of -0.0280. These results are in accordance with research by Susanto (2011), and not in accordance with research by Hadianto and Tayana (2010), Hournes et al (2012), Khairin and Harto (2014), Stelk et al (2017), Beltrame et al (2018), Brownless and Engle (2017). Therefore, Ha5 is rejected.…”

“…Sheikh and Wang (2011), Santika andSudiyatno (2011), Hermuningsih (2013), Chen et al (2013), Sari et al (2013), Matemilola et al (2013), Gomez et al (2014), Eventvci (2015, Oino and Ukaegbu (2015) also found the same thing where companies owe more if the growth experienced is higher, so the hypothesis is formulated as follows: Ha4: The growth rate has a positive effect on the company's capital structure. Hadianto and Tayana (2010), Hournes et al (2012), Khairin and Harto (2014), Stelk et al (2017), Beltrame et al (2018) also found that the higher the market risk, the company will use greater debt in its capital structure. This shows that market risk can be a signal for the use of greater debt because this market risk will increase the cost of shares in the context of the Capital Asset Pricing Model (CAPM), this is in line with signaling theory, so the hypothesis is formulated as follows: Ha5: Market risk has a positive influence on the company's capital structure.…”

Financial and Operating Risk Analysis of Two Romanian-Hungarian Border Counties

“…This construction shows a positive relationship between business risk and financial leverage. Stelk et al (2018) found that the traditional accounting measure of DFL gives statistically different estimates compared to estimates based on the elasticity measure of DFL.…”

Pengaruh Determinan Struktur Modal dan Dampaknya Terhadap Nilai Perusahaan ( Studi Empiris Pada Perusahaan Property dan Real Estate yang Terdaftar di IDX 2014-2018)

“…(Houston, 2015) Tingkat growth opportunity yang tinggi menunjukkan bahwa perusahaan mampu untuk menghasilkan keuntungan di masa yang akan datang. Hasil penelitian (Vo & Ellis, 2017) dan (Obradovich, John and Gill, 2017) menunjukkan bahwa growth opportunity berpengaruh positif dan signifikan terhadap struktur modal, sedangkan hasil penelitian (Kodongo et al, 2014) dan (Stelk et al, 2018)menyatakan bahwa growth opportunity tidak berpengaruh signifikan terhadap struktur modal. Kinerja saham merupakan salah satu factor yang menjadi pertimbangan perusahaan dalam pengambilan kebijakan struktur modal.…”

“…Pengujian untung degree of leverage menunjukkan bahwa DOL tidak memberikan pengaruh terhadap struktur modal perusahaan, kondisi ini muncul karena investor lebih melihat kepada kinerja perusahaan dalam meningkatkan laba dibanding kepada peningkatan volume penjualan, hasil penelitian ini sesuai dengan penelitian yang dilakukan oleh (Mangesti Rahayu et al, 2019) dan (Sofat & Singh, 2017) Pengaruh Growth opportunity terhadap struktur modal Hasil dari growth opportunity dengan struktur modal menunjukkan bahwa growth opportunity memberikan pengaruh walaupun tidak signifikan, kondisi ini menunjukkan bahwa growth opportunity perusahaan yang semakin meningkat akan lebih memilih penggunaan dana internal perusahaan, penelitian ini searah dengan pecking order theory dan juga penelitian yang telah dilakukan oleh (Kodongo et al, 2014) dan (Stelk et al, 2018).…”