Firm Size as Determinant of the Nonlinear Relationship Between Bank Debt and Growth Opportunities: The Case of Chilean Public Firms

Hoffmann, Paolo Saona; Bertín, Mauricio A. Jara; Warleta, Gonzalo Moreno

doi:10.2753/ree1540-496x5001s117

Cited by 4 publications

(8 citation statements)

References 92 publications

(79 reference statements)

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“…First, previous studies have focused mainly on examining the determinants of CG, CS and FP in for-profit firms (Al-Najjar & Hussainey, 2011;Gomez et al, 2016;Hoffmann et al, 2014;Sheikh & Wang, 2012).…”

Section: Introductionmentioning

confidence: 99%

Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Elmagrhi

Ntim

Malagila

et al. 2018

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Purpose: We investigate the association among trustee board diversity (TBD), corporate governance (CG), capital structure (CS) and financial performance (FP) using a sample of UK charities. Specifically, we investigate the effect of TBD on CS, and ascertain whether CG quality moderates the TBD-CS nexus.Additionally, we examine the impact of CS on FP, and ascertain whether the CS-FP nexus is also moderated by TBD and CG quality.Design/methodology/approach: We employ a number of multivariate regression techniques, including ordinary least squares, fixed-effects, lagged-effects and two-stage least squares to rigorously analyse the data and test the hypotheses.Findings: First, we find that trustee board gender diversity has a negative effect on CS, but this relationship holds only up to the point of having three women trustees. We find similar, but relatively weak results for the presence of Black, Asian and Minority Ethnic trustees. Second, we find that the TBD-CS nexus depends on the quality of CG with the relationship being stronger in charities with higher frequency of meetings, independent CG committee, and larger trustee and audit firm size. Third, we find that CS structure has a positive effect on FP, but this is moderated by TBD and CG quality. Our evidence is robust to different econometric models that adjust for alternative measures and endogeneities. We interpret our findings within the explanations of a theoretical perspective that captures insights from different CG and CS theories. Originality/value: Existing studies on TBD, CG, CS and FP in charities are rare. Our study distinctively attempts to address this empirical lacuna within the extant literature by providing four new insights with specific focus on UK charities. First, we provide new evidence on the relationship between TBD and CS.Second, we offer new evidence on the moderating effect of CG on the TBD-CS nexus. Third, we provide new evidence on the effect of CS on FP. Finally, we offer new evidence on the moderating effect of TBD and CG on the CS-FP nexus.

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Section: Introductionmentioning

confidence: 99%

Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Elmagrhi

Ntim

Malagila

et al. 2018

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“…Perusahaan dengan profitabilitas tinggi akan cenderung untuk menahan labanya, sehingga saldo laba perusahaan semakin besar. Jika perusahaan membutuhkan dana untuk operasional maupun investasi, saldo laba akan digunakan sebagai sumber pendanaan sehingga tingkat hutang relatif rendah, bahkan hingga kemungkinan tidak menggunakan hutang (Albaity & Chuan 2013, Hoffmann et al 2014, Margaretha 2014. Oleh karena itu, tinggi rendahnya profitabilitas menentukan rendah tingginya hutang yang dimilikinya.…”

Section: Profitabilitasunclassified

“…Hasil penelitian ini mendukung penelitian terdahulu yang dilakukan oleh J. J. Chen ( 2004), Gleason et al (2000), Srimindarti & Hardiningsih (2017), Tijow et al (2018). Tinggi rendahnya tingkat profitabilitas mempengaruhi rendah tingginya tingkat hutang (Albaity & Chuan 2013;Hoffmann et al 2014;Yuniarti 2013). Hasil dari regresi juga menunjukkan bahwa profitabilitas mempengaruhi kebijakan hutang hanya sebesar 12,07%.…”

Section: Uji Modelunclassified

“…Menurut pecking order theory, pendanaan internal lebih diutamakan oleh perusahaan. Perusahaan dengan tingkat profitabilitas yang tinggi memiliki tingkat hutang rendah, karena perusahaan mempunyai saldo laba yang mencukupi untuk membiayai operasionalnya (Albaity & Chuan, 2013;Hoffmann, Bertín, & Warleta, 2014;Margaretha, 2014). Sebaliknya, apabila profitabilitas rendah, perusahaan akan mempertimbangkan penggunaan hutang untuk membiayai operasionalnya (Myers, 1984).…”

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Kebijakan Hutang: Struktur Aset, Profitabilitas Dan Peluang Pertumbuhan

Dewi

Suryani

2020

Jurnal Bisnis Dan Akuntansi

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This study aims to determine the influence of asset structure, profitability and growth opportunity on debt policy. Data were collected from 16 Indonesia building construction companies annual reports from 2014 to 2017. The asset structure was measured using fixed assets ratio (FAR), profitability using return on assets (ROA), growth opportunity using price earnings ratio (PER) and debt policy using a debt to equity ratio (DER). The hypothesis was examined using panel data regression analysis. The study showed that debt policy is positively affected by the assest structure, but negatively influenced by profitability. Meanwhile, growth opportunity shows no effect on debt policy. This study implied that companies need to consider increasing profitability in meeting company funds to lower external funding needs. In addition, company managers need to maintain the level of debt to maintain the reputation and trust of external parties to the company and prevent financial distress.

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“…Focusing on ICT firms promises in terms of being subject to research is its inherent dynamism, and the likelihood of providing a context in which the study can go beyond the mere statistical confirmation of Gibrat's Law. By reducing the size range of the investigated firm population, variance related to firm size can be reduced and relationships can be kept within the linear domain (Hymer & Pashigian, 1962;Cabral, 1995;Hoffmann, Bertín & Warleta, 2014). For example, Daunfeldt and Elert (2013) investigating Gibrat's Law have identified differences on various firm populations.…”

Section: Introductionmentioning

confidence: 99%

Testing relationships between firm size and perceptions of growth and profitability: An investigation into the practices of Australian ICT SMEs

Perényi

Yukhanaev

2016

Journal of Management & Organization

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Gibrat’s Law mandates the independence of firm size and growth, while the resource-based view of the firm implies a positive relationship between firm size and profits, to be concluded in a profit–growth trade-off. Empirical studies of entrepreneurial success however, have demonstrated firms’ ability to reach a state of high growth and profitability, despite the trade-offs encapsulated within the profit–growth nexus. Upon assessing the relationships between past profitability, current firm growth and size in Australian ICT SMEs, results demonstrate positive relationships between all three indicators. This suggests that profitability can be considered the most important precursor of entrepreneurial success, and also that successful businesses do not suffer from the trade-offs implied by theory.

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Firm Size as Determinant of the Nonlinear Relationship Between Bank Debt and Growth Opportunities: The Case of Chilean Public Firms

Cited by 4 publications

References 92 publications

Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Kebijakan Hutang: Struktur Aset, Profitabilitas Dan Peluang Pertumbuhan

Testing relationships between firm size and perceptions of growth and profitability: An investigation into the practices of Australian ICT SMEs

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