Influence of the size of equity on corporate efficiency

Abstract

Research background: From the perspective of managers and shareholders, obtaining profit is the main goal and driver of company activity. A profitable company can find investors easily, because they count on a big return on investment. However, enterprises that are not effective enough could end up being taken over by others, go bankrupt or shut down business.Purpose of the article: is to identify the impact of a high share of equity in the total assets on the profitability of manufacturing companies.Methods: The focus of this paper is on the manufacturing sector. Research time-scale is set to sixteen years (2000–2015). The choice of this period is determined by data availability. In the examined interval of time over 15 thousand firms from the sector in question were flirted drawn from the EMIS. The gathered data enabled computation of the following financial indicators for the itemized companies: gross margin, operating margin, return on sales, return on assets, and return on equity. Then selection of companies was carried out to choose these with a high share of equity in its total assets. The proportion was regarded to be high if it reaches fifty one percent. Companies with quantities below this threshold have been excluded from the sample. The next step defines intervals (classes) for the equity ratio. Depending on the value of equity, the remaining firms were assigned to their corresponding class. In order to analyze influence of the quantity of equity on the level of profitability t-Student test for independent samples has been applied.Findings & Value added: The comparative analysis of the indicator of the size of equity with the indicators of profitability makes it possible to confirm that there is a significant impact on the value of profitability ratios of manufacturing companies. However, in most cases the impact is statistically irrelevant.

Internal factors influencing the cost of equity capital

“…There are many research papers dedicated to different aspects of the cost of equity capital (hereinafter referred to as CEC) management (see e.g., Michalak, 2016;Pieloch-Babiarz, 2017;Tomczak, 2017;Pustylnick, 2017;Dokulil et al, 2017). As a rule the internal factors and their impacts that are analysed by international scientists can be divided into several groups as corporate disclosure, corporate governance, social performance and other financial related performance.…”

Potential impacts of spatial restrictions on tobacco retail availability in China: a simulation study in Shanghai

“…The distribution of availability by levels of deprivation was summarised by the median of population-weighted KDE, and then a non-parametric rank-based test, the Kruskal-Wallis test, was performed to assess statistical differences in availability among deprivation quintiles for each simulation scenario 51. Finally, measured by epsilon squared (ε2),52 we used the effect size to evaluate whether the association between deprivation quintiles and availability was weakened or strengthened after the implementation of simulation scenarios. The effect size could reflect the strength of the relationship between variables and provide an estimation of the importance of this relationship 52.…”

“…Finally, measured by epsilon squared (ε2),52 we used the effect size to evaluate whether the association between deprivation quintiles and availability was weakened or strengthened after the implementation of simulation scenarios. The effect size could reflect the strength of the relationship between variables and provide an estimation of the importance of this relationship 52. The values of ε2 ranged from 0 (no impact) to 1 (full impact).…”

Bile Is a Selective Elevator for Mucosal Mechanics and Transport

“…Raincloud plots were generated as previously described . All effect size estimates were calculated based on a previous report . See SI Experimental Section for the details on data acquisition, data analysis, and representation.…”