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

Hossain, Md. Imran

doi:10.5539/ijbm.v11n9p218

Cited by 11 publications

(11 citation statements)

References 21 publications

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“…Moreover, higher managerial ownership will align the interests between managers and shareholders. While the results of this study are not in line with Hossain(2016) where the results the research are managerial ownership has a positive effect on profitability.…”

Section: The Relationship Between Managerial Ownership and Profitabilitycontrasting

confidence: 93%

The Effect of Good Corporate Governance on Banking Profitability

Pendong

Tumilaar

Budidarma

2022

EAJMR

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This study aims to determine and analyze the effect of Good Corporate Governance on profitability in the banking sector listed on the Indonesia Stock Exchange. Proxies of good corporate governance are managerial ownership, institutional ownership, the composition of independent commissioners, and the size of the board of directors, profitability is proxied by the ratio of Return on Net Operating Assets (RNOA). The sample of this research was taken using purposive sampling to obtain 43 companies that meet the criteria as a sample. The data analysis technique in this study used multiple linear regression. The results obtained in this study indicate that managerial ownership, institutional ownership, and the size of the board of directors have no significant effect on profitability, while the composition of independent commissioners has a significant effect on profitability.

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Section: The Relationship Between Managerial Ownership and Profitabilitycontrasting

confidence: 93%

The Effect of Good Corporate Governance on Banking Profitability

Pendong

Tumilaar

Budidarma

2022

EAJMR

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“…However, Hossain (2016) posited that firm size does not affect the firm's profitability. This finding was conflicting and confounding.…”

Section: Firm Size and Market Valuementioning

confidence: 99%

Firm Size and Market Value of Firms Trading at the Nairobi Securities Exchange: Does Dividend Policy Offer an Indirect Path?

Nyarombe¹,

Cheboi²,

Bonuke³

2022

theijbm

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Objective: Research focuses on the direct effect of firm size on the market value at the expense of covariates such as dividend policy. Therefore, this study investigated the mediation effect of dividend policy on the relationship between firm size and market value. Methodology: Panel research design was employed with a target of 54 companies listed at the Nairobi security exchange in Kenya, operational in the relatively stable economy period between 2008 and 2017. Data were sourced from published audited financial reports. Analysis was done using both descriptive and inferential statistics. The study tested for full mediation, partial mediating, or lack of mediation. Data analysis was facilitated using STATA (version 15) software. Findings: The results showed that firm size had a negative and significant effect on market value (b1=-0.378 p<0.001) and that dividend policy had no significant effect on market value, b2=-0.035, p>0.05. The researcher concluded that there was no ground for mediation. Originality: The results confirm that dividend policy does not mediate between firm size and market value, albeit in the Kenyan Nairobi Securities Exchange (NSE) context, and provides reasons to explore other proxies of dividend policy. In finding that dividend policy does not mediate in the relationship between firm size and market value, this study becomes the first one to justify working from home during the COVID-19 pandemic since the issue of dividends does not arise working at home. Practical Implications: The negative effect of firm size on market value is an interesting finding that implies that with the emergence of technology, firm size is inversely proportional to market value. Consequently, small firms can exploit technology more effectively than large firms to boost their market value.

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“…According to Haque (2017), only 13 listed MNCs account for 25% of market capitalization. In the studies of Hossain (2016) and Amin and Jamil (2015), it was found that the capital structure of Bangladeshi manufacturing companies is dominated by debt as debt ratios are 57% and 55% respectively. Short term debt dominated long term debt which indicates an aggressive financing strategy.…”

Section: Problem Statementmentioning

confidence: 99%

“…After analyzing the capital structure of financial institutions of Australia, Akter (2005) found that commercial banks' debt-asset and debt-equity ratios were significantly different from NBFIs. Hossain (2016) analyzed the capital structure of 81 listed manufacturing companies and related it with profitability during 2002-2014. Like the study of Amin and Jamil (2015), they also found a very high proportion of short-term debt (42.91%) and a low proportion of long term debt (12.75%) in asset financing.…”

Section: Literature Reviewmentioning

confidence: 99%

Manufacturing Firms’ Capital Structure in Bangladesh: Comparison Between Listed MNCS and Local Companies

Rahman

Tania

2021

ijafr

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The capital structure of a firm has immense significance as it has implications on corporate value and financial performance. The basic aim of the research was to analyze and compare the capital structure of Dhaka Stock Exchange (DSE)-listed multi-national companies (MNCs) and local companies of Bangladesh over 24 years (1996-2019). Stratified sampling techniques were applied to the selection of firms. Six financial leverage ratios were used to analyze and compare capital structures. There were significant differences in capital structure between local companies and MNCs as the null hypothesis was rejected. It was also found that the mean equity-financing proportion of domestic companies and MNCs were 65% and 92.5% respectively. The proportion of long term debt in total capital employed was very low for both types of companies. MNCs can raise the proportion of both short and long-term debt to take the advantage of financial leverage. Domestic companies can redeem some short term loan and replace some short term debt with long term debt. This research would be useful for corporate financial managers, creditors, and investors to take appropriate financing as well as investment decisions which would affect shareholders' wealth and value of the firm in the long run to a significant extent. JEL Classification Codes: G30, G32, G39

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

Cited by 11 publications

References 21 publications

The Effect of Good Corporate Governance on Banking Profitability

The Effect of Good Corporate Governance on Banking Profitability

Firm Size and Market Value of Firms Trading at the Nairobi Securities Exchange: Does Dividend Policy Offer an Indirect Path?

Manufacturing Firms’ Capital Structure in Bangladesh: Comparison Between Listed MNCS and Local Companies

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