An Empirical Test of the Impact of Managerial Self-Interest on Corporate Capital Structure

Sermaye Yapısını Etkileyen Faktörler: BIST Ulaştırma Endeksinde Bir Uygulama

“…Inconsistently, Drobetz et al (2013), and Arvanitis et al (2012) found that profitability is negatively and significantly correlated with leverage for the shipping firms. The finding of this study is also contradicting with Ozkan (2001), Kester (1986), Friend and Lang (1988), Shyam-Sunder and Myers (1999), and also Baskin (1989) with inverse relationship, and Bowen et al (1982), Dammon and Senbet (1988) and Givoly et al (1992)'s positive relationship between profitability and leverage.…”

“…However, from the trade-off theory perspective; since tangible assets are considered as collateral, firms can easily obtain debt, because tangible assets provide financial security to the creditors against bankruptcy, leading to a positive relationship between tangible assets and leverage as indicated by Chen (2004), Frank andGoyal (2009), Long andMalitz (1985), Rajan and Zingales (1995), Drobetz and Fix (2003), Michaelas (1999). Following Titman and Wessels (1988), Friend and Lang (1988), Rajan and Zingales (1995); tangibility (TANG) is measured as the ratio of fixed to total assets, and the hypothesis below is developed: = There is a positive relationship between tangibility and leverage…”

Capital structure and company performance: The case of free zone companies in Ghana

“…Especially with the free zone companies in Ghana most of the larger companies are multinational companies and are financed by their parent companies on long-term debt. This finding of positive relationship of long-term debt and size is consistent with previous findings (Abor 2008;Al-Sakran 2001;Barclay & Smith 1996;Barton et al 1989;Friend & Lang 1988;Hovakimian et al 2004;Kim et al 1998;MacKie-Mason 1990).…”

Ownership, capital structure and financing decision: Evidence from the UK

“…In this case, entrenched managers who have discretion over capital structure choice pursue lower debt levels to avoid the disciplining role of debt. Further, they have an incentive to protect their under-diversified human capital from bankruptcy risk associated with debt (Jensen, 1986;Friend and Lang, 1988). Zwiebel (1996) further argues that entrenched managers only issue debt as a defensive device to commit sufficient value when their empire building is threatened by potential takeover and dismissal.…”

“…Proper management of firm ownership structure can have a significant effect on firm leverage levels, echoing the argument of Brailsford et al (2002), Florackis and Ozkan (2009), and Friend and Lang (1988). Such an effect is generally imposed via a firm's external financing activities, since, in practice, security issues and proceeds are used to directly affect capital structure.…”