Do markets anticipate capital structure decisions? — Feedback effects in equity liquidity

Andrés, Christian; Cumming, Douglas J.; Karabiber, Timur; Schweizer, Denis

doi:10.1016/j.jcorpfin.2014.02.006

Cited by 54 publications

(59 citation statements)

References 109 publications

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“…These investment opportunities require investment outlays, which lead to an increase in the companies' financing deficit and thus causes the companies issuing external financing, preferably short-term debt financing (Gaud et al, 2005). A positive relationship has been recorded in academic studies such as, Chang et al (2009), Guney et al (2011), Dang et al (2014 and Andres et al (2014). Also, current and future growth must arise from (real) investments, which should be financed with more debt according to the Pecking Order Theory.…”

Section: Growth Opportunitiesmentioning

confidence: 99%

Determinants of capital structure: evidence from Shari'ah compliant and non-compliant firms

Yildirim¹,

Masih

Bacha

2018

Pacific-Basin Finance Journal

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Many Muslim individual and institutional investors seek to invest only in stocks that are compliant with the Shari'ah (i.e. Islamic law). Among others, Dow Jones addressed this demand and has developed their proprietary screening methodologies to identify Shari'ah compliant firms (SC). One key factor that distinguishes SC firms from their non-compliant peers (SNC) is that the former is not allowed to cross the leverage threshold of 33%. Due to the restrictions imposed on them, it is expected that SC firms exhibit different capital structure compared to the SNC firms. The purpose of this initial comparative study is to analyze the most reliable debt determinants identified in the literature on both firm types. This study utilizes static panel data techniques on the sample consisting of SC and SNC firms from 7 countries and 7 industries over the years 2004-2014. Our study is inconclusive and it shows that most of the determinants do exhibit different effects among both firm types. Depending on the leverage measure, the effect of different independent variables on firms' capital structure varies. A uniform effect can be exerted for debt determinants profitability for both leverage measures, and growth opportunities, firm size and tangibility for market leverage only. Our robustness tests reveal that the impact of some debt determinants on firms leverage remains consistent. The coefficient sign and significance suggests, that the capital structure decision of both firm types, both are better explained by the Pecking Order Theory for book and by the Trade-Off Theory for market leverage, respectively.

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Section: Growth Opportunitiesmentioning

confidence: 99%

Determinants of capital structure: evidence from Shari'ah compliant and non-compliant firms

Yildirim¹,

Masih

Bacha

2018

Pacific-Basin Finance Journal

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“…Many other studies reflect the same negative relationship [6]. It may be explained when investments are fixed, and higher profitability allows management to avoid external financing due to higher information costs [2]. It is generally accepted that firms that have more profits tend to have lower leverage given that high retained earnings reduce the need of external financing with debt.…”

Section: Theoretical and Empirical Approaches To The Relationship Betmentioning

confidence: 95%

Influences of the Capital Structure and the Cost of Capital on Financial Performance. Case Study on ENGIE Group

Ivascu¹,

Bărbuță-Mișu²

2017

The International Conference "The Risk in Contemporary Economy" (Dunarea De Jos University. Faculty of Economics)

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“…Muitos estudos significativos sobre estrutura de capital têm voltado seu foco para as características das empresas (por exemplo: tamanho da empresa, rentabilidade e tangibilidade), outros para o efeito de variáveis do país e da indústria como determinantes da estrutura de capital ótima (ANDRES et al, 2014). Com isso, uma ampla discussão sobre a composição do endividamento tem ocorrido na academia, mas especificamente nos custos e benefícios da alavancagem (Trade-off), assimetria de informação e hierarquia de financiamento (Pecking Order) e nos custos de agência e a influência das condições de mercado (Market Timing) TERRA, 2014;SILVA et al, 2016).…”

Section: Referencial Teóricounclassified

Há benefícios na Diversificação das Fontes de Endividamento no Setor Imobiliário no Brasil?

Tagliari

Santos

Rodrigues

2017

RACEF

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Do markets anticipate capital structure decisions? — Feedback effects in equity liquidity

Cited by 54 publications

References 109 publications

Determinants of capital structure: evidence from Shari'ah compliant and non-compliant firms

Determinants of capital structure: evidence from Shari'ah compliant and non-compliant firms

Influences of the Capital Structure and the Cost of Capital on Financial Performance. Case Study on ENGIE Group

Há benefícios na Diversificação das Fontes de Endividamento no Setor Imobiliário no Brasil?

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