Golden ratio-based capital structure as a tool for boosting firm's financial performance and market acceptance

Ulbert, József; Takács, András; Csapi, Vivien

doi:10.1016/j.heliyon.2022.e09671

Cited by 15 publications

(15 citation statements)

References 23 publications

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“…Strong correlations were discovered between departures from the capital structure based on the golden ratio and the historical maximums of the firms' sales, market value, income, and stock price. The capital structure based on the golden ratio can be helpful for businesses to improve financial performance [30].…”

Section: Golden Ratio and Its Applicationmentioning

confidence: 99%

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The Effect of Golden Ratio-Based Capital Structure on Firm’s Financial Performance

Amin

Çek

2023

Sustainability

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This study aims to apply the golden ratio to the capital structure of non-financial institutions in France and the United Kingdom to find the effect of the golden ratio’s deviation from the capital structure on financial performance. A golden ratio is an irrational number with an approximate value of 1.618. In this paper, the golden ratio was applied to develop the assumption that the firm should use debt at a percentage of 61.8% and equity at 38.2%, which deviates from the capital structure variables. The final study sample consisted of 150 non-financial institution firms from France and 200 from the U.K. between 2002 and 2021. In addition, the general method of movement (GMM) was chosen to estimate the effect of capital structure variables deviating from the golden ratio on firms’ financial performance. The study results show that when a firm uses equity at a percentage of 38.2% in its capital structure, it can have a positive and significant impact on its financial performance in both France and the U.K. However, the results show that the debt-to-equity ratio deviated from the golden ratio and had a negative and statistically significant effect on both countries’ TOBQ, EPS, ROA, and ROE. Moreover, the firms’ adoption of IFRS can positively and significantly impact financial performance in France and the UK. Generally, managers in France are encouraged to use 38.2% equity and 61.8% debt in their capital structure. However, managers in the U.K. should apply equity of 38.2% and debt of 61.8%, depending on the performance measurement demanded.

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Section: Golden Ratio and Its Applicationmentioning

confidence: 99%

“…Ulbert [30] used the golden ratio in the capital structure of manufacturing and service companies in the USA and Europe to find out how it boosts their financial performance. The study used total assets, total revenue, net income, and closing price as dependent variables and shareholder equity as independent variables.…”

Section: Introductionmentioning

confidence: 99%

The Effect of Golden Ratio-Based Capital Structure on Firm’s Financial Performance

Amin

Çek

2023

Sustainability

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“…Capital structure can be interpreted as a comparison of a company's finances. Thus, the capital owned can come from long-term debt, short-term debt, or originate from the investor's own capital (Ramadhi et al, 2021;Ulbert et al, 2022). In this case, capital structure and firm value have a close relationship.…”

Section: Moderating Effect Of Profitabilitymentioning

confidence: 99%

Moderating effect of profitability: An analysis of factors that determine firm value in the Jakarta Islamic Indeks

Amri,

Sagita,

Ramadhi

2023

IQTISHADIA

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The value of a firm is often examined by linking the factors that influence on its value. However, this method is no longer adequate because profitability also has a significant role in determining the value of a firm. Thus, incorporating the role of profitability in strengthening firm value is a necessary further step. This quantitative research uses samples of all JII companies within five years, from 2016 to 2020. Seventy financial statements were obtained as samples. Secondary data were obtained through the company website and www.idx.go.id. The analysis of data adopted was the Structural Equation Modelling (SEM) with the help of Smart PLS software. The findings show that the liquidity and debt policy have a positive and significant effect on firm value, but the capital structure, dividend policy, and profitability have no effect on firm value. Meanwhile, profitability has an effect as a moderator in the relationship between liquidity and debt policy on firm value. Nevertheless, profitability has no effect on the relationship between capital structure and dividend policy on firm value. This study could have practical implications whereby investors are more aware that stocks listed in the JII also have bright prospects in addition to their conventional counterparts.

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“…Thereby, we can conclude that green energy investment is related to firm performance positively. Ulbert et al (2022) commented that in the 20 th century, the golden ratio was discovered by modern science, including economics, business, and finance. In the financial sector, this ratio is mainly applied to technical analysis, and little attention has been paid to its use in solving corporate financial problems, such as decisions about capital structure.…”

Section: Literature Reviewmentioning

confidence: 99%

Nexus among Green Energy Investment, World Oil Price, Monetary Policy and Business Performance: Evidence from Energy Companies on the Vietnamese Stock Exchange

Hoan

2022

IJEEP

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The abhorent effect of GHG emissions effects pushes nations to consider effective policies and take initiatives accordingly inorder to maintain the surface temperature at steep level. Practitioners, Policymakers and other regulators in this regard are urging firms to behave in environmental friendly way through the increased usage of energy effeciency such as increasing renewable energy consumption and minimizing carbon emissions. By doing so, firms are now taking great interest in green business practices such as green energy investment so that they may contribute in improving energy effeciency and carbon performance. Hence, the present article intends to evalaute the effectiveness of green energy investment, world oil price and monetary policy on business performance. The sample chosen for the study is Vietnamese energy enterprises which are listed in stock exchange. The data was gathered from 45 firms covering the period of 2010-2021. The study used two methods; CUP-FM and CUP-BC to examine the association. Obtained results reveal that the chosen constrcuts share positive relation with business performance. At the end of the paper, suggestions are also given in the light of results which are useful for future researchers.

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Golden ratio-based capital structure as a tool for boosting firm's financial performance and market acceptance

Cited by 15 publications

References 23 publications

The Effect of Golden Ratio-Based Capital Structure on Firm’s Financial Performance

The Effect of Golden Ratio-Based Capital Structure on Firm’s Financial Performance

Moderating effect of profitability: An analysis of factors that determine firm value in the Jakarta Islamic Indeks

Nexus among Green Energy Investment, World Oil Price, Monetary Policy and Business Performance: Evidence from Energy Companies on the Vietnamese Stock Exchange

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