Ownership structure influencing the joint determination of dividend, leverage, and cost of capital

Rajverma, Abhinav Kumar; Arrawatia, Rakesh; Misra, A. K.; Chandra, Abhijeet

doi:10.1080/23322039.2019.1600462

Cited by 22 publications

(25 citation statements)

References 53 publications

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“…Family-controlled firms have a powerful role in most economies of emerging markets due to the high ownership concentration (Rajverma et al, 2019). It is well noted that previous studies on family firms and dividend policy depended mainly on agency theory, several studies indicated that agency theory has a mixed perspective on agency problems in family firms (Charitou et al, 2016;Villalonga & Amit, 2006).…”

Section: Family Ownership and Dividend Policymentioning

confidence: 99%

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The impact of ownership structure on dividend policy of listed firms in Jordan

Bataineh

2020

Cogent Business & Management

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Section: Family Ownership and Dividend Policymentioning

confidence: 99%

“…Wei et al, 2011). Setiawan et al (2016) and Rajverma et al (2019) reported that family firms tend to pay lower dividends as they favor controlling resources and earning some benefits from them at the cost of minority shareholders.…”

Section: Family Ownership and Dividend Policymentioning

confidence: 99%

The impact of ownership structure on dividend policy of listed firms in Jordan

Bataineh

2020

Cogent Business & Management

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“…Moreover, they revealed the effect of corporate social responsibility on the leverage level, which verifies the results of Xu et al (2015). The importance of the ownership structure, capital structure and cost of capital is analysed in the studies of Rajverma et al (2019) and Ramalho et al (2018), whereas the effect of national culture on the corporate performance is depicted in the research of Andrijauskiene & Dumciuviene (2018). These capital structure studies were conducted at both local and international levels and depict different results.…”

Section: Literature Reviewmentioning

confidence: 57%

How Capital Structure Affects Business Valuation: A Case Study of Slovakia

Valášková¹,

Lăzăroiu²,

Oláh³

et al. 2019

CEBR

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A company's capital structure is a significant factor in valuing its business. The relative levels of equity and debt affect risk and cash flow and, therefore, the amount an investor would be willing to pay for the company or an interest in it. Capital structure matters because it influences the cost of capital. Therefore, this paper aims to quantify the effect of the capital structure on the cost of capital of Slovak enterprises and to suggest an effective way of financial decision-making. The data used in the study was gained from the Bratislava Stock Exchange because publicly available information on enterprises issuing their shares on the stock exchange was needed to calculate the cost of capital. Due to the underdeveloped capital market of Slovakia, we chose 17 stock companies (except for commercial banks) operating on the Slovak market having all the data required. The financial data of companies were obtained from their financial statements spanning 2013 to 2017. The impact of the capital structure on the cost of capital was investigated by the Pearson correlation coefficient, regression analysis and Mann-Whitney U-test. The study found that there is an indirect relationship between the capital structure, the cost of capital and the size of the company. We also conclude that the growing volume of debt may result in a decline in the corporate costs of capital. These findings concerning Slovak enterprises incline to the respected compromise theory.

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“…Al-Najjar [29] suggests that asset tangibility has a negative relationship with company dividend yield. Rajverma et al [39] found a relationship between dividends, leverage, and average cost of capital that are interrelated on companies in India.…”

Section: H2 There Is a Non-linear Relationship Between Leverage And Dividend Yield Which Indicates An Optimal Valuementioning

confidence: 99%

The Impact of Firm Leverage on Shareholders’ Wealth in Southeast Asia

Retkaputri¹,

Husodo²

2021

Proceedings of the International Conference on Business and Engineering Management (ICONBEM 2021)

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The issue of the firm capital structure continues to be an exciting phenomenon to research. Begins with the development of theories regarding optimal leverage, to the proliferation of research on firms with zero leverage, which are apparently more profitable. This study attempts to identify the impact of firm leverage on shareholders' wealth in Southeast Asian firms between 2009 and 2018 using panel data analysis. Our results show that there is a non-linear relationship between firm leverage and shareholder wealth. Contrary to the suggestion of optimal leverage theory, this non-linear relationship indicates that leverage has a negative relationship to dividend yield up to a certain point, but the relationship turns positive at high debt levels. This implies that managers should consider any increase in the firm leverage, since additional debt does not always increase shareholder wealth. Additionally, our results show that several firm-level and country-level factors significantly correlated with shareholder wealth, such as sales growth, growth opportunity, profitability, cash holdings, asset tangibility, inflation and corporate income tax. Understanding the impact of leverage on shareholders' wealth enhances managers' decisions in capital structure and complements knowledge to investors who would like to increase wealth through dividends.

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Ownership structure influencing the joint determination of dividend, leverage, and cost of capital

Cited by 22 publications

References 53 publications

The impact of ownership structure on dividend policy of listed firms in Jordan

The impact of ownership structure on dividend policy of listed firms in Jordan

How Capital Structure Affects Business Valuation: A Case Study of Slovakia

The Impact of Firm Leverage on Shareholders’ Wealth in Southeast Asia

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