Asymmetric adjustment toward optimal capital structure: Evidence from a crisis

Dang, Viet Anh; Kim, Minjoo; Shin, Yongcheol

doi:10.1016/j.irfa.2014.02.013

Cited by 86 publications

(106 citation statements)

References 68 publications

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“…Barraclough (), Zhu (), Dang et al . () and Bonaimé et al . () have raised concerns about the effect of scaling by a common divisor, but Equation is only of interest in obtaining estimates of BL * i,t +1 in Equation (2).…”

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confidence: 86%

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Leverage adjustment after mergers and acquisitions

Khoo

Durand

Rath

2015

Accounting & Finance

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Australian firms have leverage targets. Speeds of adjustment to a target capital structure are higher than previously published estimates when there are major disruptions to firms' leverage ratios. Firms exploit company-specific characteristics to achieve these targets. Profitability and cash levels are important drivers of the speeds of adjustment. Firms, which have lower profitability or higher cash levels, appear to adjust faster.

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confidence: 86%

“…Dang et al . () find smaller firms adjust their leverage more quickly than those with the opposite characteristic. On the other hand, González and González () observe no differences between small and large firms in the speed of their target leverage.…”

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confidence: 95%

Leverage adjustment after mergers and acquisitions

Khoo

Durand

Rath

2015

Accounting & Finance

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“…These investment opportunities require investment outlays, which lead to an increase in the companies' financing deficit and thus causes the companies issuing external financing, preferably short-term debt financing (Gaud et al, 2005). A positive relationship has been recorded in academic studies such as, Chang et al (2009), Guney et al (2011), Dang et al (2014 and Andres et al (2014). Also, current and future growth must arise from (real) investments, which should be financed with more debt according to the Pecking Order Theory.…”

Section: Growth Opportunitiesmentioning

confidence: 99%

Determinants of capital structure: evidence from Shari'ah compliant and non-compliant firms

Yildirim¹,

Masih

Bacha

2018

Pacific-Basin Finance Journal

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Many Muslim individual and institutional investors seek to invest only in stocks that are compliant with the Shari'ah (i.e. Islamic law). Among others, Dow Jones addressed this demand and has developed their proprietary screening methodologies to identify Shari'ah compliant firms (SC). One key factor that distinguishes SC firms from their non-compliant peers (SNC) is that the former is not allowed to cross the leverage threshold of 33%. Due to the restrictions imposed on them, it is expected that SC firms exhibit different capital structure compared to the SNC firms. The purpose of this initial comparative study is to analyze the most reliable debt determinants identified in the literature on both firm types. This study utilizes static panel data techniques on the sample consisting of SC and SNC firms from 7 countries and 7 industries over the years 2004-2014. Our study is inconclusive and it shows that most of the determinants do exhibit different effects among both firm types. Depending on the leverage measure, the effect of different independent variables on firms' capital structure varies. A uniform effect can be exerted for debt determinants profitability for both leverage measures, and growth opportunities, firm size and tangibility for market leverage only. Our robustness tests reveal that the impact of some debt determinants on firms leverage remains consistent. The coefficient sign and significance suggests, that the capital structure decision of both firm types, both are better explained by the Pecking Order Theory for book and by the Trade-Off Theory for market leverage, respectively.

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“…Muhamad Umar Mai | 421 | academic studies such as, Guney, Li, & Fairchild (2011), Dang, Kim, & Shin (2014) and Andres et al (2014). However, academic studies have found a consistent negative relationship between growth opportunities and leverage, as predicted by the Trade-off Theory.…”

Section: Determinants Of Capital Structure In Sharia Criteria Manufacmentioning

confidence: 99%

Determinants of capital structure in Sharia criteria manufacturing firms on the Indonesia Stock Exchange

Umar¹

2019

Jurnal Keuangan Dan Perbankan

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Theories and results of research on the determinants of a firm's capital structure provide different explanations and evidence. Sharia criteria companies on the Indonesia Stock Exchange (IDX) are not allowed to have a ratio of total interest-based debt to total assets of more than 45%, which predicted have an impact on the determinants of their capital structure. This research was conducted at Sharia criteria manufacturing companies on the Indonesia Stock Exchange in 2011-2017. The results of the analysis showed that only profitability had the same direction that is negative on the two capital structure measures, book leverage and market leverage. Growth opportunity and firm size have different effects on the two capital structure measures, which are a positive effect on book leverage and negative on market leverage. Tangibility, business risk, and inflation only affect market leverage. Tangibility and inflation have a positive effect on market leverage, while business risk has a negative effect. This study found no evidence that gross domestic product (GDP) affects leverage, both on book leverage and market leverage. AbstrakTeori dan hasil-hasil penelitian tentang faktor-faktor penentu struktur modal perusahaan memberikan penjelasan dan bukti-bukti yang berbeda. Perusahaan-perusahaan kriteria syariah di Bursa Efek Indonesia (BEI) tidak diperkenankan memiliki rasio total utang berbasis bunga terhadap total aset lebih dari 45%, yang diprediksi akan berdampak terhadap determinan struktur modal mereka. Penelitian ini dilakukan pada perusahaan-perusahaan manufaktur kriteria syariah di BEI tahun 2011-2017. Hasil analisis menunjukkan bahwa hanya profitability yang memiliki pengaruh dengan arah yang sama yaitu negatif terhadap kedua ukuran struktur modal, yaitu book leverage dan market leverage. Growth opportunity dan ukuran perusahaan memiliki pengaruh yang berbeda terhadap kedua ukuran struktur modal, yaitu berpengaruh positif terhadap book leverage dan negatif terhadap market leverage. Tangibility, risiko bisnis, dan inflasi hanya berpengaruh terhadap market leverage. Tangibility dan inflasi berpengaruh positif terhadap market leverage, sedangkan risiko bisnis berpengaruh negatif. Penelitian ini tidak menemukan bukti bahwa gross domestic product (GDP) berpengaruh terhadap leverage, baik terhadap book leverage maupun market leverage. How toCite: Mai, M. U. (2019). Determinants of capital structure in Sharia criteria manufacturing firms on the Indonesia Stock Exchange. Jurnal Keuangan dan Perbankan, 23(3), 418-429. https://doi.

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Asymmetric adjustment toward optimal capital structure: Evidence from a crisis

Cited by 86 publications

References 68 publications

Leverage adjustment after mergers and acquisitions

Leverage adjustment after mergers and acquisitions

Determinants of capital structure: evidence from Shari'ah compliant and non-compliant firms

Determinants of capital structure in Sharia criteria manufacturing firms on the Indonesia Stock Exchange

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