Capital structure theory: Reconsidered

Ardalan, Kavous

doi:10.1016/j.ribaf.2015.11.010

Cited by 86 publications

(67 citation statements)

References 22 publications

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“…The ones that stand out the most are: tradeoff, pecking order, agency and its costs, informational asymmetry, moral hazard and adverse selection and signaling. However, they do little to discriminate between bank and non-bank debt options (Ross, 1977;Myers and Majluf, 1984;Ardalan, 2017;Sony and Bhaduri, 2018;Nicodano and Regis, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Crisis Effect on Latin American Companies’ Debts

Michele¹,

Fishlow²

2020

ERSJ

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Purpose: This study aims to verify changes in the debt structure of companies in the main Latin American countries. Approach/Methodology/Design: A difference-indifferences test is applied in a sample of 520 publicly-traded and closed companies, whose data are collected in the previous (2003-2007) and subsequent (2008-2012) periods of the crisis. Findings: The results include the replacement of bank debts by private and public non-bank debts, reduction of maturity of debts and relevance of better level of governance or regulatory environment of countries in guaranteeing the rights of creditors in this process. Practical Implications: These results are in line with the countercyclical fiscal policy adopted by these countries, guaranteeing them greater credibility in international markets. Social Implications: This study also suggest questions for future research. Each Latin American country faces many problems that are motivated by diverse events-political, for example-that impact the economy. That task involves the broadening of this methodology to incorporate internal shocks as well as global crisis. Originality/Value: One of the principal contributions of this study is the finding that companies in the main Latin American countries replace their banking credit by utilizing non-banks, just as done by the developed countries. Understanding better this effect of the global financial crisis may lead to helpful permanent macroeconomic and microeconomic measures.

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Section: Literature Reviewmentioning

confidence: 99%

Financial Crisis Effect on Latin American Companies’ Debts

Michele¹,

Fishlow²

2020

ERSJ

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“…Moreover, Modigliani and Miller [29] began the modern capital structure theory by proposing the M-M theory. Without considering corporate income tax, the enterprise value correlates with risk, but it is not influenced by capital structure [30]. However, Rose [31] indicated that the assumption that investors have potential arbitrage opportunities is unreasonable, and the two methods use different interest rates.…”

Section: Capital Structure Theorymentioning

confidence: 99%

Capital Structure of Public–Private Partnership Projects: A Sustainability Perspective

Jing

Jin

2019

Sustainability

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Capital is key to achieve the standardized operation of public–private partnership (PPP) projects. The capital structure of PPP projects stresses the structure of equity and debt funds, which are important for securing life-cycle ample funds and achieving the expected outcomes of projects. By incorporating sustainability into PPP projects, the capital structure not only secures current needs of funds, it also focuses on life-cycle stable operations and achieves economic, social, and environmental benefits. This study first set the equity–debt ratio and equity investment ratio of the private sector as the dependent variables and built a selection model of the capital structure of PPP projects from a sustainability perspective using the benefit, cost, and project conditions as core factors based on multi-objective programming and a discounted cash-flow model. Then, the qualitative analysis could be achieved according to the analysis of critical factors that had not been calculated. Afterwards, a selection process which combined the multi-objective programming model with qualitative analysis was proposed to achieve a comprehensive selection of the capital structure of PPP projects from the sustainability perspective. Finally, the process was applied to a real project to verify its rationality and usability. This study not only enriches the theoretical research of PPP projects and provides a new idea on which to build the capital structure selection model, it also proposes a selection process that can provide scientific references for the selection and optimization of the capital structure of PPP projects in practice.

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“…The door of the research on modern theory of capital structure and financing was opened by Modigliani and Miller (1958) when publishing their irrelevancy theory of capital structure (Harris & Raviv, 1991;Ardalan, 2017). Myers (2001) in his paper negates the expectation of universality in the theory of debt-equity choice and lists some well-known ones.…”

Section: Hypothesis 3: Profitability Is a Positive Indicator To Successmentioning

confidence: 99%

The predictability of financial, accounting‐based, and industrial factors on the success of newly incorporated Spanish firms

Tong

Solé

2018

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Purpose: The purpose of this paper is to identify the impacts and predictability of financial, accounting-based, and industrial factors (as well as corporate venturing) on survival-based success of newly incorporated firms in Spain.Design/methodology: Logistic regression is used for comparing the differences of factors in the prediction of future success after different time periods since the studying years (age 1, age 2, and age 3 respectively) in manufacturing and distributive sectors.Findings: Differences in predictability are observed between manufacturing and distributive sectors: it is obvious in distributive sector (rather than manufacturing sector) that liquidity, bank credit, trade credit, and concentration are positively related to success while entry rate is negatively related to success. In spite of that, some factors still show strong predictability in both two sectors. Firm size and profitability are the strongest positive factors, which are followed by corporate venturing and the growth of industrial operating revenues with positive and generally negative relationships to success separately. Besides, for some factors and variables frequently showing statistical significance, their impacts in the same age tend to be relatively stable. Practical implications:The findings of this paper can help to identify the predictability of different factors on the success of newly incorporated firms and catch the differences between manufacturing and distributive sectors.Originality/value: This paper enriches the empirical study of new firm success in Spain in depression and stagnant environment (because the observed years here are from 2009 to 2014); besides, the findings also contribute to the specific prediction study of manufacturing and distributive sectors.

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Capital structure theory: Reconsidered

Cited by 86 publications

References 22 publications

Financial Crisis Effect on Latin American Companies’ Debts

Financial Crisis Effect on Latin American Companies’ Debts

Capital Structure of Public–Private Partnership Projects: A Sustainability Perspective

The predictability of financial, accounting‐based, and industrial factors on the success of newly incorporated Spanish firms

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