Does Debt Affect Profitability? An Empirical Study of French Trade Sector

Kebewar, Mazen

doi:10.2139/ssrn.2205794

Cited by 23 publications

(49 citation statements)

References 20 publications

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“…11, No. 9;2016 Table 5 shows the results of unit root test which reveals that all data series are stationary; that means the data set is perfect for running econometric models. Here "S" means Stationary.…”

Section: Panel Unit Root Testmentioning

confidence: 99%

“…Hasan et al (2014), Singh (2013), Fareed et al (2014, Kebewar (2013 etc., this study used two widely recognized indicators of profitability i.e. Return on Assets (ROA) and Return on Equity (ROE) as dependent variables as shown in Table 3.…”

Section: Dependent Variablesmentioning

confidence: 99%

“…11, No. 9;2016 to positively influence profitability due to the risk return trade-off i.e. the more risk, the more return.…”

Section: Control Variablesmentioning

confidence: 99%

“…Since 10 industries were covered in this study, 9 industry dummy variables have been used (Hossain & Hossain, 2014). (Kebewar, 2013).…”

Section: Control Variablesmentioning

confidence: 99%

“…11, No. 9;2016 either heteroscedastic across panels or heteroscedastic and contemporaneously correlated across panels, with or without autocorrelation; PCSE is an alternative to the Feasible Generalized Least Squares (FGLS) for fitting the panel data models (Kmenta, 1997). The reason for using this model is that it provides the best estimates for the variables by automatically correcting the heteroscedasticity and autocorrelation problem.…”

Section: Panel Corrected Standard Error (Pcse) Regression Modelmentioning

confidence: 99%

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Effects of Capital Structure and Managerial Ownership on Profitability: Experience from Bangladesh

Hossain

2016

IJBM

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This paper aims at investigating the effects of capital structure and managerial ownership on the profitability of the Bangladeshi companies based on a strongly balanced panel data of 81 manufacturing companies listed under 10 industries in Dhaka Stock Exchange for 2002-2014. The results of Panel Corrected Standard Error (PCSE) regression model suggest that capital structure variables negatively affect ROA but positively affect ROE of the firms. Furthermore, Short term debt influences profitability of the firms more severely compared to Long term debt. On the contrary, managerial ownership positively affects profitability conforming to the Agency cost theory. It was also found that Bangladeshi firms followed aggressive financing strategies that led to an increase in their financial & bankruptcy risks to a great extent. That the financial managers should employ less leverage in the capital structure and minimize agency cost of equity in order to maximize the profitability of firms is the policy implication of this paper.

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Section: Panel Unit Root Testmentioning

confidence: 99%

Section: Dependent Variablesmentioning

confidence: 99%

“…11, No. 9;2016 to positively influence profitability due to the risk return trade-off i.e. the more risk, the more return.…”

Section: Control Variablesmentioning

confidence: 99%

“…Since 10 industries were covered in this study, 9 industry dummy variables have been used (Hossain & Hossain, 2014). (Kebewar, 2013).…”

Section: Control Variablesmentioning

confidence: 99%

Section: Panel Corrected Standard Error (Pcse) Regression Modelmentioning

confidence: 99%

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Effects of Capital Structure and Managerial Ownership on Profitability: Experience from Bangladesh

Hossain

2016

IJBM

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Exploring the nonlinear effect of size on profitability: evidence from an insurance brokerage industry in an emerging market

Kotey

Akomatey

Kusi

2021

AJEMS

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PurposeThis study examines the possible nonlinear effect of size on stakeholder and shareholder profitability in the Ghanaian insurance brokerage industry.Design/methodology/approachThis study employs a panel dataset of 64 Ghanaian insurance brokerage firms spanning 2011–2015. Static [ordinary least squares (OLS), fixed effect and random effect and dynamic (two-step generalized method of moments (GMM))] estimation techniques are employed to analyze the data.FindingsThe study finds the existence of both economies and diseconomies of scale and scope theories in the Ghanaian insurance brokerage industry confirming the existence of nonlinear nexus between size and performance. This finding is consistent for both stakeholder and shareholder profit performance. Thus, the results show that size improves profitability of insurance brokerage firms, but beyond a certain threshold, the relationship turns negative as size negatively affects profitability.Practical implicationsThe research findings have implications for both policy and research; the study recommends that Ghanaian brokerage managers should understand that not all growth is good and exercise a duty of care when applying growth strategies by monitoring size effect on performance so as not to go beyond the inflection point. Further research can be done to examine this effect in other contexts, timeframes and jurisdictions.Originality/valueThis research is unique in that it employs a panel dataset consisting of 96% of insurance brokerage firms in Ghana whilst employing both static and nonstatic regression models to examine the effect of size. The research analysis adopted is robust, and the findings are significant. Also, the lack of empirical studies on the operations and dealings of auxiliary institutions such as the insurance brokerage firms adds value to this research.

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Sales nationality and debt financing impact on firm’s performance and risk

Al-Khasawneh

Dasouqi

2017

EMJB

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Purpose The purpose of this paper is to examine the impact of debt financing on both performance and systematic risk in Amman Stock Exchange listed firms. The authors focus the study to analyze the differences between services and industrial firms in one sense and the differences between international and domestic firms in the other sense, as the study depends on the geographical distribution of sales to classify the nationality of firms. Design/methodology/approach The study sample includes all listed Jordanian firms in Amman Stock Exchange from 2005 to 2013 for both industrial and services sectors. Using panel data techniques, fixed effects regression with modified Driscoll-Kraay standard error as a remedy for heteroscedasticity problem is employed. Findings The results show that there is a significant negative impact of debt financing on the firm’s performance, where the sector and the sales nationality play an important role. Moreover, the results indicate that there is a significant positive impact of debt financing on the firm’s systematic risk. Taking the sector and sales nationality into consideration, the authors find that the debt financing has no significant impact on the systematic risk of services firms and domestic firms. Additionally, the findings indicate that services firms and international firms are, on average, more riskier than industrial firms and domestic firms, respectively. Originality/value The paper provides a visibility on the comparison between international and local firms in Jordan in terms of the impact of debt financing on the financial performance and systematic risk in one research.

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Does Debt Affect Profitability? An Empirical Study of French Trade Sector

Cited by 23 publications

References 20 publications

Effects of Capital Structure and Managerial Ownership on Profitability: Experience from Bangladesh

Effects of Capital Structure and Managerial Ownership on Profitability: Experience from Bangladesh

Exploring the nonlinear effect of size on profitability: evidence from an insurance brokerage industry in an emerging market

Sales nationality and debt financing impact on firm’s performance and risk

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