Capital structure and firm performance: evidence of Germany under IFRS adoption

Abdullah, Hariem; Türsoy, Turgut

doi:10.1007/s11846-019-00344-5

Cited by 125 publications

(143 citation statements)

References 58 publications

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“…So, different compensation schemes should be introduced in order to attract managers towards the organizational goal in a good corporate governance environment, as it is the responsibility of managers to make maximum capital structure [68,92]. Scholars reported that the firms with 60% debt financing considered high leveraged firms and the tax shield had a positive contribution to their firms' earnings [93]. In contrast, many studies also found negative effects of leverage on firms' assets and equity earnings due to high financial costs [94].…”

Section: Capital Structure and Firm Performancementioning

confidence: 99%

Do corporate governance structure and capital structure matter for the performance of the firms? An empirical testing with the contemplation of outliers

Wang

Ramzan

2020

PLoS ONE

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A superlative combination of the Board of Directors (BOD) with diverse members is considered a sign of a good governance structure. Meanwhile, the key decision taken by BOD to make organizations profitable is the capital structure with the optimal mix of debt and equity. Unfortunately, previous literature has reported this relationship with a mixed trend, which may be due to research gaps in the statistical analysis. Moreover, it also shows that the relationship between them has not yet been fully predicted and can still be completely understood. This study contains time-variant and time-invariant variables, and these variables usually have an outlier's problem. As we know that the OLS estimators are more sensitive to react adversely to this problem, yet we have not received enough evidence from similar researches that cares about it. Consistent with these arguments, this study focuses primarily on exploring the influence of corporate governance structure and the capital structure on firms' market-oriented and accounting-based performance, especially with the contemplation of outliers. Hypotheses have been evaluated using M-estimators and S-estimators of robust regression for 45 listed firms for the period from 2013 to 2017. The findings reveal that the governance structure of firms with BOD, independent director, institutional investors, audit committee and female directors accelerates its performance. Further, we find that the leverage ratio improves accounting performance, but it has a downward impact on the share prices of listed firms. Our study contributes to the prevailing literature by proving that the kind of governance structure that based on diverse expert members and a capital structure with a high volume of debt is of utmost importance to the performance of firms as a whole.

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Section: Capital Structure and Firm Performancementioning

confidence: 99%

Do corporate governance structure and capital structure matter for the performance of the firms? An empirical testing with the contemplation of outliers

Wang

Ramzan

2020

PLoS ONE

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“…Similarly, an array of finance studies discussed the role of efficient management of capital structure in determining the firm performance. (Abdullah & Tursoy, 2019;Chadha & Sharma, 2015;Le Vy & Phan, 2017). An imbalance acquiring of debts or equity to finance the business operations can hamper the corporate efficiency by enhancing the business volatility (Gernát et al, 2020).…”

Section: Background Of Studymentioning

confidence: 99%

National culture and firm financial performance: A mediating role of firm financing decision

Farooq

Ahmed

Ashfaq

et al. 2020

Cogent Business & Management

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“…Regarding the general relationship between capital structure and firm performance, the evidence is still mixed and inconclusive. Several studies find positive impacts of debt financing on firm performance and profitability (V˘atavu, 2015;Vithessonthi and Tongurai, 2015;Gonz´alez, 2013;Fosu et al, 2016;Abdullah and Tursoy, 2019), while others show negative impacts (Fosu, 2013;Margaritis and Psillaki, 2010;Ramli et al, 2019;Davydov, 2016;Ahmed and Afza, 2019).…”

Section: Introductionmentioning

confidence: 99%

Financial leverage and performance of SMEs in Vietnam: Evidence from the post-crisis period

Bui

Nguyen

Ngo³

2021

Econ Bus Lett

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This study examines the link between capital structure and firm performance (measured by ROA and ROE), focusing on a large sample of SMEs in Vietnam during the postcrisis period (2008-2016). Empirical results from various panel data models confirm the nonlinear relationship between debt financing and firm profitability. This relationship takes the form of an inverted-U shape. Firm profitability only increases to a certain level of leverage. When the debt ratio becomes too high, firm performance starts to decrease. These results highlight the role of financial distress costs in debt financing for SMEs. Furthermore, the paper also confirms the heterogeneity between state-owned firms and private ones. Policy implications are also discussed.

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Capital structure and firm performance: evidence of Germany under IFRS adoption

Cited by 125 publications

References 58 publications

Do corporate governance structure and capital structure matter for the performance of the firms? An empirical testing with the contemplation of outliers

Do corporate governance structure and capital structure matter for the performance of the firms? An empirical testing with the contemplation of outliers

National culture and firm financial performance: A mediating role of firm financing decision

Financial leverage and performance of SMEs in Vietnam: Evidence from the post-crisis period

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