Capital structure and firm characteristics: an empirical analysis from Egypt

Omran, Mohammed; Pointon, John

doi:10.1108/14757700911006976

Cited by 38 publications

(38 citation statements)

References 21 publications

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“…Therefore, we partially accept the hypothesis number 1, which states that: There is a significant relationship between the firm's tangibility and capital structure of the firm expressed by leverage ratio. Similarly, this relationship was demonstrated by previous SME studies such as Hall et al (2004) and Cassar and Holmes (2003 large Egyptian companies reached a quite similar conclusion (Omran and Pointon, 2009). These past reviews demonstrated a positive relationship between utilization of Long-term liabilities and tangibility, recommending that the tangible asset is the important determinant of access to outside fund for SMEs.…”

Section: Results Of Hypotheses Testingsupporting

confidence: 86%

“…Meanwhile, it was positively significant with total leverage and short term leverage of the second sample and insignificant with the long term leverage. The results of the second sample are consistent with results of Aybar-Arias et al (2012), Hall et al, (2000), Omran and Pointon (2009 ) and the assumption of Myers and Majluf (1984), who concluded that the growing companies would need outside finance.…”

Section: Growth and Leverage Ratiosupporting

confidence: 89%

“…Also, Krasauskaite and Hirth (2011) gave a support to the pecking order hypothesis and verified the negative correlation between the two variables. Also, this negative correlation is confirmed in the Egyptian large listed companies by Omran and Pointon (2009).…”

Section: Liquidity and Leverage Ratiomentioning

confidence: 63%

“…The average size of the two samples was similar, and moreover, it showed a perfect compatible positive relationship with the three leverage ratios in quoted and unquoted samples. The previous literature of both SMEs and large Egyptian firms showed the same positivity, but it wasn't significant with all leverage ratios (Mac an Bhaird and Lucey, 2010;Daskalakis et al2014;Omran and Pointon, 2009;Yazdanfar and Ohman, 2016;Abobakr and Elgiziry and, 2015;Youssef and El-ghonamie, 2015;Daskalakis and Psillaki, 2009). They attributed that positive relationship mainly to low transaction and information cost and low default risk of sized firms.…”

Section: Size and Leverage Ratiomentioning

confidence: 81%

“…Therefore, we will control the effect of the economic sector. The most relevant evidence of the effect of industry factor on the relationship between firm characteristics and capital structure introduced by Omran and Pointon (2009).They conducted a cross sectorial study on the capital structure of the listed companies in Egypt. Their conclusion shed light on the significant industry effect.…”

Section: Control Variablementioning

confidence: 99%

See 4 more Smart Citations

Investigating the Impact of Firm Characteristics on Capital Structure of Quoted and Unquoted SMEs

ELbekpashy¹,

Elgiziry²

2017

AFR

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This study aims to enhance the understanding of SMEs' capital structure in Egypt. The study tests the impact of asset structure (tangibility), size, profitability, liquidity, growth, age, and ownership structure as independent variables on the leverage ratio. Three alternative variables are used as a proxy for leverage: total, long term, and short term leverage. The study further investigates the significance of the relationship between the economic sector as a control variable and the three leverage ratios. Multiple regression analysis is used to develop the explanatory models for two samples of SMEs. The first sample comprises of 28 listed and traded SMEs in Egypt. The second sample includes panel data of 95 non-quoted SMEs. The overall model recommends that all the independent and control variables significantly explain the capital structure decisions of SMEs in Egypt. The results of the analysis of the two samples show a high degree of similarity. The managerial ownership is found to be negatively correlated with short term leverage, while the block holding ownership is positively correlated with the total and the short term leverage. Moreover, the sector shows a significant relationship with the capital structure. The results of the study demonstrate that the financing behavior of SMEs in Egypt is consistent with the pecking order theory. Finally, the study introduces useful recommendations for policy makers and SMEs' management in Egypt.

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Section: Results Of Hypotheses Testingsupporting

confidence: 86%

Section: Growth and Leverage Ratiosupporting

confidence: 89%

Section: Liquidity and Leverage Ratiomentioning

confidence: 63%

Section: Size and Leverage Ratiomentioning

confidence: 81%

Section: Control Variablementioning

confidence: 99%

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Investigating the Impact of Firm Characteristics on Capital Structure of Quoted and Unquoted SMEs

ELbekpashy¹,

Elgiziry²

2017

AFR

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Stock return volatility and capital structure measures of nonfinancial firms in a dynamic panel model: Evidence from Pakistan

Ahmed

Hla

2018

Int. J Fin Econ

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We investigate the impact of stock return volatility on different capital structure measures of nonfinancial firms in a dynamic panel model. Two‐step system generalized method of moment dynamic panel estimator is applied to nonfinancial sector's data from Pakistan Stock Exchange over the period 2001–2014. The results imply that stock return volatility has a significant negative impact on book leverage and long‐term market leverage ratios. However, stock return volatility causes the increase in total market leverage ratios. Moreover, book leverage and long‐term market leverage of firms decrease as a result of an increase in stock return volatility in different classification of firms. Conversely, stock return volatility has a significant positive impact on total market leverage ratios in those classifications of firms. Capital structure decisions are more sensitive to stock return volatility as default risk increases. Firms significantly go for the reduction in their debt financing due to high stock returns volatility and to avoid from possible consequences of default. The results are robust to alternative measures such as cash flow volatility and earnings volatility.

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Exploring the underlying factors affecting capital structure decision: A quantitative analysis

Shil

Hossain

Ullah

2019

J Corp Accounting Finance

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Objective: This study deploys an earnest effort to understand the factors that affect the managers involved in managing the portfolio of funding in companies. Capital structure decision is one of the crucial decisions that finance managers have to make. This study tries to identify a host of factors controlling the attitude of finance managers in choosing different sources of financing, as reflected in financials of respected companies. Design/methodology/approach: Based on the data available in different secondary sources (such as the financial statements published by the sampled companies), an exploratory form of research is applied here. The samples for the study are selected from companies which are listed in Dhaka Stock Exchange (DSE) under pharmaceutical, textile, and banking sectors. Different descriptive and inferential statistical tools are used to present the data and test relevant hypotheses by using statistical package for the social sciences. Findings: Based on the literature review, the study has identified a couple of factors affecting capital structure decision. These factors are replicated in selected Bangladeshi firms to understand their implications. Although the study fails to report any determinants having strong relationship which is statistically significant, the model passes goodness-of-fit test and residual analysis, which shows the presence of normality.Research limitations/implications: The findings of the study could not be generalized due to some inherent limitations of the research. The study only covers selective companies from three sectors, leaving others from the preview of analysis, which limits the scope of the study. However, the findings of the research could be helpful for individual firms to find their status in the recent trend of practicing capital structure decision; thereby they can adopt or revise their policy in this regard. Another major limitation of the study is that, it applies a quantitative form of analysis based on the data published in general purpose financial statements. It would be more beneficial if quantitative findings could be validated through qualitative analysis in order to bring data triangulation which is left for further study. Extending the analysis to cover all the firms listed in DSE can give a better outlook on capital structure issues in Bangladesh.

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Capital structure and firm characteristics: an empirical analysis from Egypt

Cited by 38 publications

References 21 publications

Investigating the Impact of Firm Characteristics on Capital Structure of Quoted and Unquoted SMEs

Investigating the Impact of Firm Characteristics on Capital Structure of Quoted and Unquoted SMEs

Stock return volatility and capital structure measures of nonfinancial firms in a dynamic panel model: Evidence from Pakistan

Exploring the underlying factors affecting capital structure decision: A quantitative analysis

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