The impact of capital structure and certain firm specific variables on the value of the firm: Empirical evidence from Kuwait

Gharaibeh, Ahmad Mohammad Obeid; Sarea, Adel

doi:10.22495/cocv13i1c10p6

Cited by 3 publications

(5 citation statements)

References 14 publications

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“…However, there were also controls on the issue price of equity, which might have forced many companies to issue convertible debt to recoup part of their loss due to equity underpricing. The results of this study are in line with a series of research (Horizons, Chowdhury & Chowdhury, 2010;Gharaibeh & Sarea, 2015;Aggarwal & Padhan, 2017;Setiawanta, Purwanto & Hakim, 2019, but against the findings of Antwi, Mills and Zhao (2012). This result supports the existence of the signaling theory revealed by Spence (1973), which claims that the company's management gives a signal or a sign and provides relevant information that can be utilized by the investor.…”

Section: Resultssupporting

confidence: 90%

“…The first hypothesis is accepted, i.e., the negative significant coefficient of the relationship suggests that an increase in debt ratio (leverage) decreases the firm value (Gharaibeh & Sarea, 2015). It indicates that when the capital structure of the firm's debt rises, investors will feel worried because they may doubt whether the company can meet all its obligations or not.…”

Section: Resultsmentioning

confidence: 99%

“…The statement of the company's capital structure is usually expressed in the form of a mixture of long-term debt, short-term debt, and the company's internal equity (Gharaibeh & Sarea, 2015). Capital structure is a combination of foreign capital and corporate capital.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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Financial Performance, Exchange Rate, and Firm Value: The Indonesian Public Companies Case

Setiawanta

Utomo

Ghozali

et al. 2020

OMEE

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Transactions between countries require a stable exchange rate. When the exchange rate of the country experiences uncertainty, then this will influence the company’s financial performance and even affect the company’s market value. This study aims to look for the direct influence of the company’s financial performance as an independent variable and the firm value as a dependent variable within the investor perspective, also including the exchange rate factor as a moderating variable. Investors could probably learn about information on the ups-and-downs of the Indonesian rupiah against foreign currencies before their investment decisions, even though financial performance substantially influences the company’s market value. The sample in this study was 50 companies within four years of observation. Data processing was carried out by the Eviews statistical application. The results showed that the financial performance, which is proxied by the capital structure, affects firm value, but not profitability. The impact of exchange rate moderation also occurs in the relationship of capital structure and firm value, while the moderation effect on profitability and firm value is not proven. This study provides information that exchange rates influence investment interests upon investors’ analysis of the financial performance of the capital structure, but not profitability.

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Section: Resultssupporting

confidence: 90%

Section: Resultsmentioning

confidence: 99%

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Financial Performance, Exchange Rate, and Firm Value: The Indonesian Public Companies Case

Setiawanta

Utomo

Ghozali

et al. 2020

OMEE

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“…The relationship between growth opportunity and debt/equity ratio could not be determined. Gharaibeh and Sarea (2015) aimed to determine the factors affecting the capital structure of 215 companies from 49 different industries operating in Kuwait between 2009 and 2013 in their study where financial leverage represents the capital structure. As a result of the analysis, there is a positive and significant relationship between firm age, growth opportunity, liquidity, firm size, asset structure and financial leverage ratio, but a negative correlation was found with ROE.…”

Section: Literaturementioning

confidence: 99%

Sermaye Yapısı Seçimlerinin Belirleyicilerine PLSR ve MIMIC-PLS Model Yaklaşımı ve Karşılaştırmalı Analizi

YILMAZ>

Çelik

2022

Yüzüncü Yıl Üniversitesi Sosyal Bilimler Enstitüsü Dergisi

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In this study, the determinants of capital structure choices, which are very important for companies. For this reason, the data of 167 companies traded in ISE and BIST between 2008 and 2017 were collected. 11 variables as 8 indicators, and 3 causes, which are thought to have an impact on the capital structure, were determined. In the study, 2 analyses were made and the results were compared. In the first analysis, 3 models were established by changing the dependent variable and analysed with the Partial Least Squares Regression (PLSR) method. Afterwards, the MIMIC Model, which can provide simultaneous solution to these 3 models, is again analysed with Partial Least Squares (PLS). A Comparison of the results of the two analyses is given. According to the results of the analysis, it has been seen that the most effective indicator variables on the capital structure in all models are profitability and liquidity. Among the reason variables, which are thought to represent the capital structure best in the model, total debt is the variable that best represents the capital structure, which is included as a latent variable. Again, according to the MIMIC model result, it has been seen that the effective theory for the companies traded in the BIST in Turkey is the trade-off theory. Finally, when the PLSR and MIMIC models are compared, it can be said that the MIMIC model is more preferable in terms of both examining the relationships in more detail and the compatibility of the results with the theories.

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“…The agricultural sector in these parts of the world has a strategic economic value added to these economies and a primary contributor to their Gross domestic productions (Faten, et al, 2014). Furthermore, Gharaibeh and Sarea (2015)aimed at their study " The Impact of Capital Structure and Certain Firm Specific Variables on the Value of the Firm: Empirical Evidence from KUWAIT" to study the effect of leverage and certain firm-characteristics on firm's value and on the decision to use debt, empirically. The researchers used 48 companies listed in the Kuwait Stock Exchange, where these companies represent four different sectors.…”

Section: Eva In Kuwaitmentioning

confidence: 99%

The Importance of EconomicValue Added (EVA) and Studies Related To It in Kuwaiti Firms: A Critical Literature Review

Osaimi¹

2019

مجلة البحوث المالیة والتجاریة

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This study aims two folds. First, it aims to investigate the importance of using economic value added(EVA ) in the evaluation of financial performance in the companies worldwide and how it is used. Second, it aims to reveal the fact about the extent to which studies abouteconomic value added(EVA) are conducted in Kuwait .To achieve this, the researcher has used Google search engine looking for any literature relevant to such subject matter. Many keywords were applied in Arabic and English language. Results revealed thatvarious scholars claimed that (EVA) is more essential in measuring the real financial performance of companies and that it is popular in many countries specially the developed ones to measure financial performance of the corporate sector. In addition, the study found that there are too many formulas or equations that may be used to calculate EVA. More importantly, the results showed that Kuwait, as well as most of the developing countries,has conducted lesser studies about EVA as well as having little concerns with regards to EVA's application as a tool for measuring the performance of the financial companies

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The impact of capital structure and certain firm specific variables on the value of the firm: Empirical evidence from Kuwait

Cited by 3 publications

References 14 publications

Financial Performance, Exchange Rate, and Firm Value: The Indonesian Public Companies Case

Financial Performance, Exchange Rate, and Firm Value: The Indonesian Public Companies Case

Sermaye Yapısı Seçimlerinin Belirleyicilerine PLSR ve MIMIC-PLS Model Yaklaşımı ve Karşılaştırmalı Analizi

The Importance of EconomicValue Added (EVA) and Studies Related To It in Kuwaiti Firms: A Critical Literature Review

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