Discovering Capital Structure Determinants for SAARC Energy Firms

Ghani, Erlane K; Rehan, Raja; Salahuddin, Sultan; Hye, Qazi Muhammad Adnan

doi:10.32479/ijeep.13938

Cited by 9 publications

(22 citation statements)

References 23 publications

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“…These variables are measured as follows: Size is the natural logarithm of sales (Hovakimian, 2006; Abdeljawad and Alia, 2023). Tangibility is estimated as net property, plant and equipment to total assets (Rogão and Da Silva Serrasqueiro, 2023; Ghani et al , 2023a; Ngoc and Trang, 2023). The MB ratio is the sum of total assets minus book value of equity plus market value of equity to total assets.…”

Section: Methodsmentioning

confidence: 99%

“… Financial slack is cash and short-term investments, scaled by total assets (Hovakimian, 2006). Leverage is total debt scaled by total assets (Ghani et al , 2023b; Kannadhasan, 2014; Ghani et al , 2023a, 2023b). …”

Section: Methodsmentioning

confidence: 99%

“…Tangibility is estimated as net property, plant and equipment to total assets (Rogão and Da Silva Serrasqueiro, 2023; Ghani et al , 2023a; Ngoc and Trang, 2023).…”

Section: Methodsmentioning

confidence: 99%

“…Leverage is total debt scaled by total assets (Ghani et al, 2023b;Kannadhasan, 2014;Ghani et al, 2023aGhani et al, , 2023b.…”

Section: Measurement Of Variablesmentioning

confidence: 99%

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Financing constraints and corporate investment decision: evidence from an emerging economy

Abdeljawad,

Abu Alia,

Demaidi

2023

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Purpose Existing theories on the determining factors of corporate investment decisions raise the importance of financial market imperfections in explaining investment behavior. Many factors have been proposed as drivers of investment, mainly in developed economies, while emerging countries have almost been neglected. The main purpose of this study is to examine the effect of financing constraints on the investment behavior of a small context, namely, Jordan, with an imperfect environment. Design/methodology/approach This study considers panel data regressions from the industrial companies traded at the Amman Stock Exchange with a total of 1,058 firm-year observations. Findings The results are able to demonstrate that business size, tangibility, market-to-book ratio, profitability, financial slack and leverage are major drivers of investment choices. The results support the importance of information asymmetry in explaining the investment behavior of firms. Nonetheless, the Q-theory is in place, as is firm agility. Practical implications Policies to reduce information asymmetry are immediately needed to help firms increase investments by providing them with access to training, technology and market information. They also should enhance the firms’ opportunities for growth. Moreover, they should make it easier for businesses to access financial slack, such as by improving access to credit and financial institutions. They also can work to improve the financial infrastructure to meet the financing needs of businesses. Finally, smaller businesses should be assisted by improving their ability to invest and grow. Originality/value To the best of the authors’ knowledge, this is one of the first studies, if any, to investigate this issue in a distinct environment. Despite the unique characteristics of Jordan, the findings are applicable to other countries that experience comparable political and economic circumstances because Jordan has traits common to many emerging nations.

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Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

“…Tangibility is estimated as net property, plant and equipment to total assets (Rogão and Da Silva Serrasqueiro, 2023; Ghani et al , 2023a; Ngoc and Trang, 2023).…”

Section: Methodsmentioning

confidence: 99%

“…Leverage is total debt scaled by total assets (Ghani et al, 2023b;Kannadhasan, 2014;Ghani et al, 2023aGhani et al, , 2023b.…”

Section: Measurement Of Variablesmentioning

confidence: 99%

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Financing constraints and corporate investment decision: evidence from an emerging economy

Abdeljawad,

Abu Alia,

Demaidi

2023

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“…Cost of capital also have some degree of influence on financial performance (Kasidi et al, 2022). According to Ghani et al (2022), an array of factors influences the capital arrangement of a firm. These factors include profitability, tangibility of assets, size, and the non-debt tax shield among others.…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of Cost of Capital: Kenyan context

Kengere,

Manasseh Njagi,

Chonga

et al. 2023

EAFJ

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The purpose of this paper was to look at the determinants of the cost of capital for a firm. The study conducted a literature review with the goal of identifying the factors that influence the cost of capital for a firm. The research showed that profitability, liquidity, tax, growth, size, and age of the company are among the major determinants that influence the cost of capital for a firm. Further the research showed a positive correlation between the cost of capital and profitability, liquidity, growth, size, and age of the company. The capital arrangement of a firm is determined on account of the pecking order theory and trade-off theory while bearing in mind the cost elements associated with it. In Kenya, economic stability and political stability are the primary determinants that determine the cost of capital for a firm. This determining factor influences the availability and cost of credit offered by financial institutions in Kenya.

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