Is Equity Market Timing the Sole Criteria for Capital Structure Decisions? An Insight from Indian Firms

Khanna, Sakshi; Srivastava, Amit; Medury, Yajulu

doi:10.17010//2015/v9i10/79558

Cited by 2 publications

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“…Inflation (INF): has a positive impact on debt structure. This result is consistent with the research hypothesis, according to the trade-off theory and the work of Deesomsak et al (2009), Fan et al (2012), Tongkong et al (2013), Khanna et al (2015). This shows that, during inflation, businesses tend to use loans with longer maturities compared to short terms because long-term interest expenses are lower than short-term borrowing costs.…”

Section: Discussionsupporting

confidence: 90%

Factors Affecting Debt Maturity Structure: Evidence from Listed Enterprises in Vietnam

Phan¹

2020

JAFEB

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This paper analyzes factors affecting the debt maturity structure of enterprises listed on the Vietnam stock market. The panel data of research sample includes 549 non-financial listed enterprises on the Vietnam stock market from 2009 to 2019. The Generalized Least Square (GLS) tool is employed to address econometric issues and to improve the accuracy of the regression coefficients. In this research, debt maturity structure is the dependent variable. Capital structures, fixed assets, liquidity, firm size, asset maturity, profitability, corporate income tax, gross domestic product, inflation rate, credit growth scale are independent variables in the study. The model results show, that among the factors affecting the structure of debt maturity, the capital structure, asset structure, and firm size have the highest estimation coefficients, which shows that capital structure, asset structure, and firm size plays an important role in the decision-making process of debt maturity structure. The empirical results show that there are differences in the impact of these factors on the debt maturity structures in state-owned enterprises and non-state enterprises listed on the Vietnam stock market. The findings of this article are useful for business administrators, helping business managers make the right financial decisions to determine the target debt maturity structure in enterprises.

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Section: Discussionsupporting

confidence: 90%

Factors Affecting Debt Maturity Structure: Evidence from Listed Enterprises in Vietnam

Phan¹

2020

JAFEB

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“…On the other hand, equity issuance is more favorable when the book-to-market ratio is high. If neither condition is favorable, companies need to anticipate market trends and carefully choose the timing for cost-effective capital raising (Khanna et al. , 2015).…”

Section: Choice Of Capital Structure and Smes Failurementioning

confidence: 99%

Capital structure and default risk of small and medium enterprises: evidence from Algeria

Baha

Levy

Hasnaoui

2023

JRF

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PurposeThis study examines the existence of a causal relationship between the capital structure at the creation of the small and medium-sized enterprise (SME) and its viability after 3 years.Design/methodology/approachThe empirical strategy consists of proceeding in two stages: first, the use of the Logit model to regress the studied variable reflecting the state of an SME of being in default or not, on the variables likely to significantly explain its default risk. Second, the authors investigate the existence of a relationship between the capital structure at the time of SME creation and viability. The obtained results are analyzed to confirm the initial hypothesis.FindingsThe results obtained indicate that the Logit model performs well in terms of discriminating and classifying SMEs. These findings are consistent with previous studies and support their conclusions regarding the model's strong classification capability. Furthermore, the model demonstrates a noteworthy classification rate of 90% for capital SMEs, specifically joint-stock companies (SpA). Out of the 10 observed SMEs, 8 nonfailing SMEs were still operational three years after the observation period, resulting in a survival rate of 80%.Practical implicationsThe results allow bankers to better understand the main determinants of SME default risk and demonstrate the existence of a causal relationship between the capital structure of an SME and its viability. This study is conducted in the construction, public works, and hydraulics sector (second largest sector in Algeria after the services sector). In future works, the authors try to extend the results of this study to other sectors of activity.Originality/valueThe richness of the established Logit model is to consider both financial and non-financial and qualitative variables. Although the qualitative variables are not statistically significant in the results obtained, the authors used the “Legal form” variable to demonstrate the existence of a causal relationship between the capital structure of an SME and its viability.

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Is Equity Market Timing the Sole Criteria for Capital Structure Decisions? An Insight from Indian Firms

Cited by 2 publications

References 0 publications

Factors Affecting Debt Maturity Structure: Evidence from Listed Enterprises in Vietnam

Factors Affecting Debt Maturity Structure: Evidence from Listed Enterprises in Vietnam

Capital structure and default risk of small and medium enterprises: evidence from Algeria

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