Liquidity and capital structure: The case of Thailand

Udomsirikul, Prasit; Jumreornvong, Seksak; Jiraporn, Pornsit

doi:10.1016/j.mulfin.2010.12.008

Cited by 66 publications

(80 citation statements)

References 48 publications

(40 reference statements)

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“…Rao (1989) documented a negative relationship between profitability and leverage. This is supported by subsequent empirical evidence that argues that profitable firms use more debt to force managers to pay out a firm's excess cash (Lipson and Mortal, 2009;Udomsirikul et al, 2011;Tamimi and Al-Fayoumi, 2011). Another recent study on capital structure of Malaysian firms found that firm size and profitability significantly influence capital structure (Haron et al, 2013).…”

Section: Liquidity Measuresmentioning

confidence: 84%

“…Udomsirikul et al (2011) test this relationship in a sample of Thai firms, with capital markets that are arguably even less sophisticated than the Indian capital markets. Interestingly, their results are consistent with Lipson and Mortal (2009), affirming a strong negative relationship between liquidity and leverage.…”

Section: Review Of Literaturementioning

confidence: 99%

“…We use market-tobook ratio as our GROWTH control variable. Several other studies predict a negative relation between market to book ratio and leverage (Frieder and Martell, 2006;Lipson and Mortal, 2009;Udomsirikul et al, 2011). The ratio of profit before interest and taxes (PBIT) to total assets is used as a proxy for profitability (PROF).…”

Section: Liquidity Measuresmentioning

confidence: 99%

See 2 more Smart Citations

Does Liquidity Determine Capital Structure? Evidence from India

Sharma

Paul

2015

Global Business Review

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We explore the relationship between liquidity of a firm's equity and its capital structure. Firms with more liquid stocks benefit from lower costs of equity issuance. Therefore, it is hypothesized that such firms are likely to have a preference for equity in their capital structure. This article empirically investigates the relationship between liquidity and capital structure decisions on a sample of Indian firms. Contrary to the existing literature, we find no empirical evidence for an inverse relationship between liquidity and leverage among Indian firms. The results are indicative of the fact that due to distinctive features of emerging markets, namely, less sophisticated capital markets, higher information asymmetry, concentrated ownership, constrained access to debt and prevalence of family owned businesses, there are other more significant determinants of capital structure that subsume the explanatory power of liquidity variables.

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Section: Liquidity Measuresmentioning

confidence: 84%

Section: Review Of Literaturementioning

confidence: 99%

Section: Liquidity Measuresmentioning

confidence: 99%

See 1 more Smart Citation

Does Liquidity Determine Capital Structure? Evidence from India

Sharma

Paul

2015

Global Business Review

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“…Following Rajan and Zingales (1995), we use two main measures of long-term debt ratio are used; the first is debt equity 1 (DE1) (Friend & Lang, 1988 ;Titman & Wessels, 1988;Harvey, Lins & Roper, 2004;Kee Hong, Kang & Wang, 2011) which measures the level of debt as the ratio of the book value of long term debt to market value of equity; the second measure is debt equity 2 (DE2) (Bowman, 1980;Brian & Zhang, 2011;Prasit U, Seksak J, Pornsit J, 2011) by substituting the book value of long term debt by market value of long term debt (the Market Value of Long Term Debt is approximated using the formula of Miguel and Pindado (2001).…”

Section: The Dependant Variablesmentioning

confidence: 99%

Impact of Ownership Structure on Debt Equity Ratio: A Static and a Dynamic Analytical Framework

Said¹

2013

IBR

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This study examines the determinants of capital structure as part of the agency theory. French corporate structure with its high corporate concentration provides able us to analyze how ownership structure affects debt policy. Emphasis is placed on the role of insiders and outsiders ownership in explaining the debt ratio. The empirical study examined a sample of French companies listed on SBF 250 index and observed over the period [1997][1998][1999][2000][2001][2002][2003][2004][2005][2006][2007]. Test results show a non linear relationship between managerial ownership and capital structure. Outside shareholdings do not play a disciplinary role to effectively control the behavior of managers in a static framework. However, for high levels of managerial ownership, outside shareholdings does not significantly affect debt ratio. In addition, in a dynamic framework, we document a negative and a significant effect of external investors on debt equity ratio. Furthermore, the effect of management ownership is not significant.

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“…Moreover, firm's capital structure decisions could be influenced by stock liquidity. Accordingly, the motivation of firms having more liquid stocks is greater than firms having less liquid assets (Udomsirikul et al, 2011). In the 1980s some studies find a positive relation between stock liquidity and its price which lead to reduce the cost of raising capital. Therefore firms try to develop their stock liquidity.…”

Section: Literature Reviewmentioning

confidence: 99%

Macroeconomics, Firm-Specific Factors and Stock Liquidity: An Empirical Evidence from Jordan

Salamat¹

2016

International Journal of Financial Research

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The aim of this study is to identify the macroeconomics and firm-specific determinants of stock liquidity in the context of Jordan over the period (2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014). As a sample, all industrial firms listed in the Amman Stock Exchange are taken for analysis. Unbalanced panel data (cross-sectional and time series) is used to obtain the results. The results show that the stock liquidity is positively affected by earnings per share, interest rate, gross domestic product, leverage, and the size of the firm while negatively affected by the ratio of the market value per share to the book value per share, inflation rate, and the return on assets.

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Liquidity and capital structure: The case of Thailand

Cited by 66 publications

References 48 publications

Does Liquidity Determine Capital Structure? Evidence from India

Does Liquidity Determine Capital Structure? Evidence from India

Impact of Ownership Structure on Debt Equity Ratio: A Static and a Dynamic Analytical Framework

Macroeconomics, Firm-Specific Factors and Stock Liquidity: An Empirical Evidence from Jordan

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