Capital structure volatility in Europe

Campbell, Gareth; Rogers, Meeghan

doi:10.1016/j.irfa.2017.11.008

Cited by 22 publications

(46 citation statements)

References 29 publications

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“…In addition, a study by De Angelo and Roll (2015) found that capital structure stability is the action, not the rule. Other than that, the study by Campbell and Rogers (2018) states that firms with a high volatile capital structure tend to gain less profit and lead to stricter dividend policies compared to firms with a stable capital structure. Empirically, prior research finds that a firm's capital structure is influenced not only by firm-specific but also by country-specific factors (Li and Islam, 2019).…”

Section: Determinants Of Capital Structurementioning

confidence: 99%

Determinants of capital structure: evidence from Malaysian firms

Saif‐Alyousfi

Md-Rus

Mohd

et al. 2020

APJBA

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PurposeThe purpose of this paper is to examine the determinants of capital structure using a dataset of firms in Malaysia.Design/methodology/approachThis paper carries out a panel data analysis of 8,270 observations from 827 listed non-financial firms on the Malaysia stock market over the period 2008–2017. To estimate the model and analyse the data collected from the DataStream and World Bank databases, the authors use static panel estimation techniques as well as two-step difference and system dynamic GMM estimator.FindingsThe results show that profitability, growth opportunity, tax-shield, liquidity and cash flow volatility have a negative and significant impact on debt measures. However, the effects of collateral, non-debt tax and earnings volatility on measures of debt are positive and significant. In addition, firm size, firm age, inflation rate and interest rate are important determinants of the present value of debt. The results also show a significant inverse U-shaped relationship between the firm's age and its capital structure. In general, the results support the proposition advocated by the pecking order and trade-off theories.Practical implicationsThe results of this study necessitate formulation of various policy measures that can counter the effects of debt on firms.Originality/valueThe present study is among the earliest to use both the book and market value measures of capital structure. It also uses three proxies for each: total debt, long-term debt and short-term debt. It incorporates earning volatility and cash flow volatility as new independent variables in the model. These variables have not previously been used together with both book and market value measures of capital structure. The study also examines the non-monotonic relationship between firm's age and capital structure using a quadratic regression method. It applies both static panel techniques and dynamic GMM estimation techniques to analyse the data.

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Section: Determinants Of Capital Structurementioning

confidence: 99%

Determinants of capital structure: evidence from Malaysian firms

Saif‐Alyousfi

Md-Rus

Mohd

et al. 2020

APJBA

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“…Nevertheless, Ardalan (2018) proved that there prevails an optimal capital structure for the firm. However, for companies based in the major markets of United Kingdom, Germany, France, and PIIGS (Portugal, Italy, Ireland, Greece, and Spain) significant discrepancy was established in their capital structures between 2006 and 2016 (Campbell and Rogers 2018). As well, DeAngelo and Roll (2015) noticed for U.S. companies, capital structure stability is the exception, not the rule.…”

Section: Introductionmentioning

confidence: 98%

“…Pioneering studies on capital structure based their hypotheses on perfect capital market conditions that lead to rather theoretical assumptions. Campbell and Rogers (2018) discussed about the Corporate Finance Trilemma that occurs since companies would like to decide on their debt, cash holdings, and equity payout policies at the same time, but firms cannot. Nevertheless, Ardalan (2018) proved that there prevails an optimal capital structure for the firm.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Capital Structure on Risk and Firm Performance: Empirical Evidence for the Bucharest Stock Exchange Listed Companies

Nenu

Vintilă

Gherghina

2018

IJFS

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This paper analyzes the evolution of the main theories regarding the capital structure and the related impact on risk and corporate performance. The capital structure is a dynamic process that changes over time, depending on the variables that influence the overall evolution of the economy, a particular sector, or a company. It may also change depending on the company's forecasts of its expected profitability, capital structure being, in fact, a risk-return compromise. This study contributes to the literature by investigating the drivers of capital structure of the firms from the Romanian market. For the econometric analysis, we applied multivariate fixed-effects regressions, as well as dynamic panel-data estimations (two-step system generalized method of moments, GMM) on a panel comprising the companies listed on the Bucharest Stock Exchange. The analyzed period, 2000-2016, covers a cycle with significant changes in the Romanian economy. Our results showed that leverage is positively correlated with the size of the company and the share price volatility. On the other hand, the debt structure has a different impact on corporate performance, whether this calculated on accounting measures or seen as market share price evolution.

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“…The high share of debt volatility most often leads to reduced profitability, and is a consequence of high volatility of operating and investment activities or a tendency to release cash balances and principal payments for absorbing fluctuations (Campbell & Rogers, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Utilisation of ANFIS in analysing impact of cost structure on Croatian maritime companies development

Valčić

2021

Pomorstvo (Online)

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The modern approach to growth analysis and development of enterprises includes the analysis of defined business models progressively. One of the essential factors of any business model is the cost structure, mostly intended to analyse and define better the processes of transferring value to the customer, maintain customer relationship and generate revenue. An analysis of the costs incurred in these processes should facilitate the effective definition of key resources, key activities and key partnerships. Modern theory distinguishes two types of business models from a cost perspective: a cost-driven model and a value-driven model. The cost-driven model is focused on minimizing costs wherever possible and such an approach has the propensity to create and maintain the lowest possible cost structure using low-cost value propositions. The value-driven model is focused on value creation and superior value propositions. The aim of this research, by using Adaptive Neuro-Fuzzy Inference System (ANFIS) approach, is to create models for analysing the impact of cost structure on sustainable development and business survival with respect to selected financial indicators. Based on clustering methods, model creation is preceded by a search of the link between the business performance indicators and parameters that increase or decrease a particular cost component. The sample for creation of the model is based on financial data of five maritime Croatian companies obtained through four business years. Thus, by analysis of the companies’ business operations based on such created models it is possible to define the limits, namely the degrees of increase or decrease of a particular type of cost at which companies achieve sound business growth and development. Consequently, the management of a company is enabled to form effective business strategies. Such strategies in modern context imply innovation in business, new technological processes, efficient stock management, and improved relationships with customers and suppliers.

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Capital structure volatility in Europe

Cited by 22 publications

References 29 publications

Determinants of capital structure: evidence from Malaysian firms

Determinants of capital structure: evidence from Malaysian firms

The Impact of Capital Structure on Risk and Firm Performance: Empirical Evidence for the Bucharest Stock Exchange Listed Companies

Utilisation of ANFIS in analysing impact of cost structure on Croatian maritime companies development

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