The Impact of Debt Ratios on Corporate Financial Performance: the Case of Baltic Listed Companies

Zelgalve, Elvira; Berzkalne, Irina

doi:10.7220/aesr.2335.8742.2015.9.1.7

Cited by 4 publications

(3 citation statements)

References 5 publications

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“…Some studies revealed that the debt-to-assets ratio had a positive effect on companies' financial performance (Gill and Obradovich, 2012;Davydov, 2016;Detthamrong et al 2017). However, other studies found a negative association between the debt-to-assets ratio and the firms' performance (Luper and Isaac, 2012;Zelgalve and Berzkalne, 2015;Le et al 2017). Likewise, Amraoui et al 2018found a significant negative relationship between debt-to-assets ratio and financial performance of 52 firms listed in Morocco from 2009…”

Section: Debt-to-income Ratiomentioning

confidence: 99%

Market Risk and Financial Performance of Non-financial Companies Listed on the Moroccan Stock Exchange

Kassi¹,

Rathnayake²,

Edjoukou³

2019

Preprint

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This study examines the effect of market risk on the financial performance of 31 non-financial companies listed on the Casablanca Stock Exchange (CSE) over the period 2000-2016. We utilize three alternative variables to assess financial performance, namely return on assets, return on equity and profit margin. Next, we use the degree of financial leverage, the book-to-market ratio, and the gearing ratio as market risk variables. Besides, we employ the pooled OLS model, the fixed effects model, the random-effects model, the difference GMM and the system GMM models. The results show that market risk indicators have a negative and significant influence on the companies' financial performance. The elasticities are greater following the book-to-market ratio compared to the degree of financial leverage and the gearing ratio, respectively. In most cases, the firm size, the tangibility ratio, and the cash holdings ratio have a positive effect on financial performance, whereas the firms' age, the debt-to-income ratio, stock turnover, and leverage hurt the performance of these non-financial companies. Therefore, decision-makers and managers should mitigate market risk through appropriate strategies of risk management, such as derivatives and insurance techniques.

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Section: Debt-to-income Ratiomentioning

confidence: 99%

Market Risk and Financial Performance of Non-financial Companies Listed on the Moroccan Stock Exchange

Kassi¹,

Rathnayake²,

Edjoukou³

2019

Preprint

View full text Add to dashboard Cite

show abstract

“…Further, Yildirim (2015) noted that it is better to focus on the change in leverage than leverage itself as an indicator of a firm's growth. In contrast, Zelgalve and Berzkalne (2015) argued that the size of the firm and the type of debt have a bearing on a firm's growth. Their study indicated that larger firms have a less-negative relationship between profitability and debt.…”

Section: Relevant Literaturementioning

confidence: 99%

Strategic determinants of performance of family businesses in the USA and Canada

Lee¹,

Pati²

2020

IJFBRD

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The research explores the relationship among accounting-based performance indices measured in terms of return on assets (ROA), return on equity (ROE), and return on investment (ROI), and market-based performance indices, Tobin's Q, market value, and sales growth in the USA and Canadian family-based businesses. Through the traditional OLS regression analysis, it was confirmed that the firm size, advertising intensity, capital intensity, current ratio, labour productivity, and the firm's age are most likely to have a significant and positive impact on marketing performance indices. Additionally, strategic factors like firm size, capital intensity, current ratio, and labour productivity are statistically significant in determining accounting-based performance measure while R&D intensity (except ROA and ROE), debt leverage, and firm's age are not statistically significant in indicating its accounting performance. The results have a broad implication for managers in family businesses to build a competitive advantage for their organisation.

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“…In this section, we first employed a modified static model following previous empirical studies using three alternative measures of financial performance (Siyanbola et al 2015;Zelgalve and Berzkalne 2015;Muriithi et al 2016;Admassu 2016;Abdellahi et al 2017; among others) and taking into account the issue of non-stationary variables:…”

Section: Model Specificationmentioning

confidence: 99%

Market Risk and Financial Performance of Non-Financial Companies Listed on the Moroccan Stock Exchange

Kassi

Rathnayake

Louembé

et al. 2019

Risks

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This study examines the effect of market risk on the financial performance of 31 non-financial companies listed on the Casablanca Stock Exchange (CSE) over the period 2000–2016. We utilized three alternative variables to assess financial performance, namely, the return on assets, the return on equity and the profit margin. We used the degree of financial leverage, the book-to-market ratio, and the gearing ratio as the indicators of market risk. Then, we employed the pooled OLS model, the fixed effects model, the random effects model, the difference-GMM and the system-GMM models. The results show that the different measures of market risk have significant negative influences on the companies’ financial performance. The elasticities are greater following the degree of financial leverage compared with the book-to-market ratio and the gearing ratio. In most cases, the firm’s age, the cash holdings ratio, the firm’s size, the debt-to-assets ratio, and the tangibility ratio have positive effects on financial performance, whereas the debt-to-income ratio and the stock turnover hurt the performance of these non-financial companies. Therefore, decision-makers and managers should mitigate market risk through appropriate strategies of risk management, such as derivatives and insurance techniques.

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The Impact of Debt Ratios on Corporate Financial Performance: the Case of Baltic Listed Companies

Abstract: The study reviews the different debt ratios used in empirical research papers; assesses the financial ratios of the Baltic listed companies; and empirically tests the regression between profitability and capital structure.

Cited by 4 publications

References 5 publications

Market Risk and Financial Performance of Non-financial Companies Listed on the Moroccan Stock Exchange

Market Risk and Financial Performance of Non-financial Companies Listed on the Moroccan Stock Exchange

Strategic determinants of performance of family businesses in the USA and Canada

Market Risk and Financial Performance of Non-Financial Companies Listed on the Moroccan Stock Exchange

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