Determinants of capital structure; a sector-level analysis for Indian manufacturing firms

Panda, Ajaya Kumar; Nanda, Swagatika

doi:10.1108/ijppm-12-2018-0451

Cited by 37 publications

(51 citation statements)

References 72 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…The positive and insignificant relationship between firm size and capital structure is not in line with the results of the empirical studies of Sofat & Singh (2017) and Panda & Nanda (2020) which state that firm size has a negative relationship to capital structure. The direction of the positive influence between firm size and capital structure is supported by the results of research by Neves et al (2020) and Lemma & Negash (2014) which state that firm size has a positive influence on capital structure.…”

Section: Firm Size and Capital Structurecontrasting

confidence: 73%

“…Based on an empirical study conducted by Sofat & Singh (2017) and Panda & Nanda (2020), firm size has a negative relationship to capital structure. These results are in line with the pecking order theory, which assumes that large companies have the advantage of being able to issue securities rather than using debt.…”

Section: Introductionmentioning

confidence: 99%

“…Another opinion expressed by Alipour et al (2015) stated that company growth has a negative and significant relationship to capital structure. Panda & Nanda (2020) and Neves et al (2020) state that company growth has a negative and significant effect on capital structure. Based on the trade-off theory, it shows a negative relationship between growth and debt.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Size, Growth, Profitability and Capital Structure

Giovanni

Utami

Widiyaningrum

2020

View full text Add to dashboard Cite

Penelitian ini bertujuan untuk memberikan bukti empiris mengenai peran profitabilitas, ukuran perusahaan serta pertumbuhan perusahaan dalam menjelaskan variabilitas struktur modal. Pengambilan sampel penelitian menggunakan metode purposive sampling. Sampel penelitian yang memenuhi kriteria berjumlah 34 perusahaan sektor industri barang konsumsi yang terdaftar di Bursa Efek Indonesia periode 2015-2018. Variabel independen terdiri dari profitabilitas, ukuran perusahaan serta pertumbuhan perusahaan. Dalam penelitian ini, pengujian hipotesis dilakukan dengan menggunakan regresi linear yang diolah melalui software SPSS. Nilai koefisien determinasi sebesar 98,58% artinya variabilitas struktur modal dipengaruhi oleh variabel profitabilitas, ukuran perusahaan dan pertumbuhan perusahaan. Berdasarkan hasil analisis regresi linier dengan tingkat signifikansi 5%, hasil penelitian memberikan bukti bahwa terdapat hubungan negatif dan signifikan antara profitabilitas dengan struktur modal serta terdapat hubungan positif dan signifikam antara pertumbuhan perusahaan dengan struktur modal. Penelitian ini juga memberikan bukti bahwa ukuran perusahaan tidak memiliki peran sebagai determinan struktur modal. Kata kunci: pertumbuhan; profitabilitas; struktur modal; ukuran ABSTRACT. This study aims to provide empirical evidence regarding the role of profitability, firm size and firm growth in explaining the variability of capital structure. The research sample was taken using purposive sampling method. The research sample that met the criteria was 34 companies in the consumer goods industry which were listed on the Indonesia Stock Exchange for the 2015-2018 period. The independent variables consist of profitability, company size and company growth. In this study, hypothesis testing was carried out using linear regression processed through SPSS software. The coefficient of determination is 98.58%, meaning that the variability of the capital structure is influenced by the variables of profitability, company size and company growth. Based on the results of linear regression analysis with a significance level of 5%, the results provide evidence that there is a negative and significant relationship between profitability and capital structure and there is a positive and significant relationship between company growth and capital structure. This study also provides evidence that firm size has no role as a determinant of capital structure.

show abstract

Section: Firm Size and Capital Structurecontrasting

confidence: 73%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Size, Growth, Profitability and Capital Structure

Giovanni

Utami

Widiyaningrum

2020

View full text Add to dashboard Cite

show abstract

“…The explanation is found in the research by Fitriyah and Hidayat (2011) who stated that the IOS negatively affects debt policy. Meanwhile, Panda and Nanda (2018) found that the relationship between investment opportunities and debt ratios was negative if using a sample of chemical firms, goods firms, food and agro, textile and transportation companies. In construction, machinery, and metal firm, the relationship between investment opportunities and debt ratio is positive.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Kyissima, Xue and Abeid (2019); Tailab (2014); Desmintari and Yetty (2015); Haron (2016); and Vătavu (2015) find that company performance has a negative effect on debt ratio. Meanwhile, Serghiescu and Vaidean (2014); Murtiningtyas (2012); and Panda and Nanda (2018) find that debt ratios have a positive influence on company performance.…”

Section: Introductionmentioning

confidence: 99%

Determinants of Debt Policy for Public Companies in Indonesia

Mukhibad¹,

Subowo²,

Maharin³

et al. 2020

JAFEB

View full text Add to dashboard Cite

This research seeks to determine the influence of investment opportunity set (IOS); profitability (Return on Assets -ROA), liquidity, business risk and firm size on debt policy. We used 42 manufacturing companies registered on the Indonesian Stock Exchange (Bursa Efek Indonesia) as object research. We used purposive sampling method to determined samples, consider the period observation from 2012 to 2016, and produce 168 units analysis. Data analysis uses the multiple regressions with the SPSS tools. The results of the study found that companies' debt policies in Indonesia are negatively affected by the liquidity. Investment opportunity set (IOS) has negative effect on debt policy. Meanwhile, ROA, Return on Invested Capital (ROIC), and firm size of a company has no impact on debt policy. These findings indicate that Indonesian manufacture companies do not see the high investment opportunity set and profitability as a policy basis for increasing debt. Moreover, the high profitability also does not cause companies to increase their debt ratio. Our study indicates that Indonesian manufacture companies use internal funds to fund their investment. This finding is a concern for creditors, as they can now see the ability of the companies, and especially their performance, in determining their credit policies.

show abstract

Receptivity of capital structure with financial flexibility: A study on manufacturing firms

Panda

Nanda²,

Hegde

et al. 2021

Int. J Fin Econ

Self Cite

View full text Add to dashboard Cite

The purpose of this paper is to empirically investigate the static capital structure decisions' dynamic responses due to shocks and its relative sensitivity in the presence of financial flexibility. To capture this, we use Panel Corrected Standard Error (PCSE) models and Panel Vector Autoregression (Panel-VAR) models on the sample of 2,094 listed Indian Manufacturing firms from 2009 to 2019. The empirical findings demonstrate substantial difference in the dynamic responses of capital structure under the conditions of shocks given to its key determinants, with and without financial flexibility. Debt ratio of financially flexible firms reacts positively to asset tangibility and size whereas it reacts negatively to growth opportunity, non-debt tax shield and profitability. These findings may assist firm managers and policy makers in gauging the limitations associated with leveraging their debt structure on the virtue of being financially flexible.

show abstract

Determinants of capital structure; a sector-level analysis for Indian manufacturing firms

Cited by 37 publications

References 72 publications

Size, Growth, Profitability and Capital Structure

Size, Growth, Profitability and Capital Structure

Determinants of Debt Policy for Public Companies in Indonesia

Receptivity of capital structure with financial flexibility: A study on manufacturing firms

Contact Info

Product

Resources

About