Firm characteristics, corporate governance and capital structure adjustments: A comparative study of listed firms in Sri Lanka and India

Buvanendra, S.; Sridharan, P.; Thiyagarajan, S.

doi:10.1016/j.iimb.2017.10.002

Cited by 51 publications

(63 citation statements)

References 64 publications

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“…It is expected that there is a conflict of interest when the same person serves in both positions, because that gives too much power and control. Buvanendra et al (2017) obtained a negative statistically significant relationship between CEO duality and debt.…”

Section: Corporate Governance Variables (Board Size Ceo Status)mentioning

confidence: 95%

Exploring the Determinants of Financial Structure in the Technology Industry: Panel Data Evidence from the New York Stock Exchange Listed Companies

Vintilă

Gherghina

Toader

2019

JRFM

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This paper aims to analyze the influencing factors on the financial structure of 51 companies listed on the New York Stock Exchange, in the technology industry, from 2005–2018. The objective is to see the impact of independent company-specific variables such as company size, tangibility of assets, growth opportunity, effective tax rate, current liquidity, depreciation, stock rotation, financial return, working capital, price to book value, price to earnings ratio, as well as the impact of governance variables and macroeconomic variables such as inflation rate, interest rate, market size, gross domestic product per capita. Using panel data and multiple linear regressions, we analyze the relationship between the independent variables listed above and the dependent variables, namely the total debt ratio, the long-term debt ratio and the short-term debt ratio. The results of the analysis showed that variables such as size, tangibility, liquidity, profitability have a significant influence on the dependent variables in accordance with the theories regarding the capital structure.

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Section: Corporate Governance Variables (Board Size Ceo Status)mentioning

confidence: 95%

Exploring the Determinants of Financial Structure in the Technology Industry: Panel Data Evidence from the New York Stock Exchange Listed Companies

Vintilă

Gherghina

Toader

2019

JRFM

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“…In addition, in case of unbalanced panel data, as here, Roodman (2009) indicates that it is better to use system GMM and avoid difference GMM estimation. Greene (2008) also observes that system GMM has the advantages of robustness to endogeneity and the short panel bias (see Buvanendra et al 2017). So, to make our study more robust we run a system GMM estimation and show the comparative results under robustness tests results.…”

mentioning

confidence: 90%

Firm’s Risk-Return Association Facets and Prospect Theory Findings—An Emerging versus Developed Country Context

Gupta¹,

Pathak²

2018

Risks

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A risk-return association under normal market conditions can be conventional positive (risk-averse) or "paradoxical" negative (risk seeking). This study has the objective to investigate whether such an association is stable across market trends (i.e., bull and bear) and for overall, industry-classified and partitions sub-samples after controlling for a firm's age, size, leverage and liquidity using operating performance risk-return measures. In total, this study analyses 2666 firms (1199 firms from 15 developed countries and 1467 firms from 12 emerging countries) for the period of 1999-2015. Results show that in the overall and bull sub-periods, firms across countries are showing conventional positive (superior firms) and "paradoxical" negative (poor firms) in most cases. However, in the bear sub-periods all firms from emerging countries are risk seeking in order to maintain their position in the pecking order.Empirical literature associates managers' risk behavior with assumptions of rational behavior, outcome weighing and utility maximization. Financial theory also posits that risk-averse behavior manifests when low risk is associated with low return, as well as when high risk is rewarded by high return (Fisher and Hall 1969). This risk-averse outlook also assumes that for each strategic alternative, firms and managers would choose the alternative which maximizes utility (Schoemaker 1982). Aaker and Jacobson (1987) find support for a positive association between performance and both systematic and unsystematic risk, when risk is defined using accounting data. A number of other studies have also found support for a positive risk-return relationship (Bettis 1981).To provide a theoretical lens to explain the negative association between risk and return, scholars have drawn motivation from prospect theory (Fiegenbaum and Thomas 1988;Kahneman and Tversky 1979) and behavioral theory of the firm (Bromiley 1991). Under the behavioral theory of the firm, managers undertake more risk when performance is below aspiration, and they take low risk when performance is above aspirations. Due to the contemporaneous association between risk-taking and low performance, this relationship could be negative. This is due to lower performance and higher risk in cross-sectional accounting data, or lagging effects of risk and performance would continue in the short-term in longitudinal accounting data. On the other hand, prospect theory (Kahneman and Tversky 1979) studies argue that managers in low performing firms face negatively framed prospects and are thus more likely to undertake high risk. In contrast, managers in high-performing firms face positively framed prospects and take low risk. Both of these results would cause negative correlation between high performance and low risk. Thus, prospect theory and behavioral theory of the firm provide possible explanations for the negative risk-return relationships.The research hypotheses in these studies emphasizes on manager's and/or firm's attainment of above (below) returns in compariso...

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“…The econometric models have been estimated using multivariate regressions, respectively, the ordinary least squares (henceforth "OLS") method with fixed effects, similar to Kieschnick and Moussawi (2018); Cooper and Lambertides (2018); Buvanendra et al (2017); Le and Phan (2017); Oino and Ukaegbu (2015); Tongurai (2015a, 2015b). The analysis has been performed using the software SPSS Statistics 23 and Stata 13.…”

Section: The Econometric Models Presentationmentioning

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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Firm characteristics, corporate governance and capital structure adjustments: A comparative study of listed firms in Sri Lanka and India

Cited by 51 publications

References 64 publications

Exploring the Determinants of Financial Structure in the Technology Industry: Panel Data Evidence from the New York Stock Exchange Listed Companies

Exploring the Determinants of Financial Structure in the Technology Industry: Panel Data Evidence from the New York Stock Exchange Listed Companies

Firm’s Risk-Return Association Facets and Prospect Theory Findings—An Emerging versus Developed Country Context

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

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