Capital Structure and Firm Performance in the Financial Sector: Evidence from Australia

Skopljak, Vedran; Luo, Robin H.

doi:10.5296/ajfa.v4i1.1319

Cited by 14 publications

(11 citation statements)

References 29 publications

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“…This creates additional risk for companies active in countries with high inflation and, therefore, increasing interest rates, making them more vulnerable amid high cost of capital (Vintila et al 2018). On the other hand, several studies indicate that large return on equity values compared to historical average (10 years trend) will generate downsize pressure due to mean reversion pattern, especially in small entry barriers sectors (Skopljak and Luo, 2012). This is due to new competition attracted by high financial return coupled with minimum initial investment (Avci, 2016).…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of Financial Structure on Return on Equity: Evidence From Wholesale of Motor Vehicle Parts and Accessories Industry

Baciu¹,

Brezeanu²

2018

EJEF

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A widely debated topic during the last years is represented by the choice of financial structure of companies, especially in developing or emerging countries, characterized by economies without a tough and a mature financial system. The purpose of this research is to determine whether there is a relationship between capital structure and firm performance of firms active in Romania in the wholesale of motors vehicle parts and accessories (NACE 4531). Capital structure refers to how a firm chooses to finance their assets and future growth by dividing debt into subcategories (bank, commercial) and time horizon, while firm performance is evaluated by the return on equity (financial return). By determining this relationship, firms in these sectors should have a better understanding of how to select the financing for their future growth. The main output of the study consists in the fact that the financial structure divided by debt components of the companies does not influence significantly the return on equity during periods of low interest rates, like the case of Romania during 2016.

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Section: Literature Reviewmentioning

confidence: 99%

Impact of Financial Structure on Return on Equity: Evidence From Wholesale of Motor Vehicle Parts and Accessories Industry

Baciu¹,

Brezeanu²

2018

EJEF

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“…The authors therefore conclude that the decision regarding debt structure must be taken while considering the size of the sales. Skopljak and Luo (2012) established that improvement in firm performance induce by leverage ratios is attributed to low levels of leverage while, at a relatively high levels of leverage, the effect of financial distress exceeds the beneficial effects of debt. Given that a firm must seek an outside source of funds, its choice between debt and equity will depend in part on the magnitude of potential agency costs of debt (Long and Malitz, 1985).…”

Section: Review Of Related Literaturementioning

confidence: 99%

The Impact of Debt Structure on Firm Performance: Empirical Evidence from Nigerian Quoted Firms

Nwude

Itiri

Agbadua

et al. 2016

Asian Economic and Financial Review

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This paper provides an empirical investigation of the impact of debt structure on the performance of Nigerian quoted firms. It was conducted using 12-year annualized panel data spanning the period 2001-2012 for cross section of 43 firms from different sectorial classifications. The data were collated from the annual reports of the sampled firms and Nigeria Stock Exchange factbooks. The study employed three regression estimations (Pooled OLS, Fixed Effects and Random Effects) as a result of unobserved heterogeneity in the dataset. The outcome from the regression estimations showed that debt structure has negative and significant impact on the performance of Nigerian quoted firms within the period under review. The study concludes that debt structure contribute negatively to performance of Nigerian quoted firms, thereby agree with pecking order theory.

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“…Decision about firms Capital structure is very important element in the firms overall strategy. According to Skopljak & Luo (2012) Agency cost theory defines that difference of the goals of Managers and the owners of the firms can affect the overall performance of the firm in terms of its market value and profitability. Chowdhury & Chowdhury (2010) expressed that in order to increase the shareholder's wealth the suitable selection of capital structure of the firm between debt and equity combination plays the vital role.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of Capital Structure on Firms Financial Performance and Shareholders Wealth: Textile Sector of Pakistan

Mujahid¹,

Akhtar²

2014

IJLD

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The basic purpose of our research paper is to evaluate the impact of Capital Structure on the Firms Financial Performance and Shareholders Wealth in textile sector of Pakistan. We have conducted the regression analysis on our sample data of 155 textile firms for the year 2006 to 2011. We use the overall textile sector ROA ROE and EPS ratios as accounting measures to evaluate the impact of Capital Structure on Firms Financial Performance and Shareholders wealth. Our results shows that the capital structure positively impact the Firms Financial Performance and Shareholders Wealth.

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Capital Structure and Firm Performance in the Financial Sector: Evidence from Australia

Cited by 14 publications

References 29 publications

Impact of Financial Structure on Return on Equity: Evidence From Wholesale of Motor Vehicle Parts and Accessories Industry

Impact of Financial Structure on Return on Equity: Evidence From Wholesale of Motor Vehicle Parts and Accessories Industry

The Impact of Debt Structure on Firm Performance: Empirical Evidence from Nigerian Quoted Firms

Impact of Capital Structure on Firms Financial Performance and Shareholders Wealth: Textile Sector of Pakistan

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