Impact of Capital Structure on Profitability: Panel Data Evidence of the Telecom Industry in the United States

Habibniya, Houshang; Dsouza, Suzan; Rabbani, Mustafa Raza; Nawaz, Nishad; Demiraj, Rezart

doi:10.3390/risks10080157

Cited by 20 publications

(11 citation statements)

References 37 publications

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“…In this case, the results rely on the error covariance matrix of every group of observations by applying the estimation option arellano accommodating a fully general structure (Arellano 1987), i.e., heteroskedasticity and serial correlation. Reporting robust standard errors is standard practice in this line of research (Habibniya et al 2022).…”

Section: Panel Estimationmentioning

confidence: 99%

The Impact of Intangible Capital on Firm Profitability in the Technology and Healthcare Sectors

Dragomir

2024

IJFS

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The aim of the present study is to assess the impact of structural capital intensity and utilization on firm profitability in an international setting: the European Union countries, plus Norway, Switzerland and the United Kingdom. The indicators are calculated based on financial data downloaded from the Refinitiv Eikon database. Two financial ratios are used as proxies for the intensity and utilization of structural capital. The balanced panel consists of 625 companies from 25 countries, over the period from 2013 to 2022. The panel includes financial information on two industries that are considered innovation-oriented, namely technology and healthcare. Alternative model specifications are proposed to test the robustness of the basic model, including dynamic models (with lagged dependent variables). The present study indicates that a higher proportion of structural capital (intangible assets, excluding goodwill) is a negative factor for company profitability in the technology and healthcare sectors. There is no indication that a more intense use of intangible assets and more investments in R&D positively contribute to company profitability in the respective industries, for a large sample of listed companies. A higher proportion of intangible assets, as reported in financial statements, is possibly related to inefficiencies in the management of structural capital. The inverse relationship between profitability and investments in intangible assets is likely due to failures in cost accounting. Limitations and future research propositions are provided in the conclusions.

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Section: Panel Estimationmentioning

confidence: 99%

The Impact of Intangible Capital on Firm Profitability in the Technology and Healthcare Sectors

Dragomir

2024

IJFS

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“…For example, ROA (Return on Assets) was discussed by Sohibien et al (2022). ROE (Return on Equity) was analyzed by Habibniya et al (2022), and Anton and Afloarei Nucu (2020). ROS (Return on Sales) was evaluated by Avi (2022).…”

Section: Literature Reviewmentioning

confidence: 99%

Does the Size of the Business Still Matter, or Is Profitability under New Management, by Order of the COVID-19?

Blazek

Ďurana

Michulek

et al. 2023

JRFM

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Businesses should come up with a strategy, plans, and goals so that their total assets can make a profit during the transformation process. Utilizing various features of a property can generate this income. This comparison provides evidence of profitability. During the global economic downturn, a number of businesses encountered issues that caused their payment situations and profitability to deteriorate. The goal of this article is to ascertain whether particular profitability indicators also revealed the pandemic-related global crisis, particularly in the Visegrad Group countries. This analysis was conducted based on categories of business size. Specifically, 8671 enterprises were analyzed. The evaluation of indicators revealed whether there was a significant change in a negative direction, a significant change in a positive direction, or no significant change. It was possible to make a clear diagram of the companies that took part in the study and to figure out the median values in order to compare the results of the chosen profitability indicators. Correspondence analysis was conducted so that conclusions could be more accurate. According to the findings of this study, indicators of ROA, ROE, and ROS did not change significantly across enterprise size categories in the years preceding, during, and after the pandemic. Since the government regulations of the V4 countries had a significant impact on these businesses, the change was most obvious in the case of small businesses within the ROS indicator. The added value of the article is derived from its analysis of selected profitability indicators in the largest group of Central European nations and its relevance.

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“…This, in turn, has a negative impact on profitability. Additionally, profitability affects equity as it is a part of the composition implying that the inclination of firms towards inefficient use of capital persists regardless of how it is funded [28].…”

Section: Profitabilitymentioning

confidence: 99%

Capital Structure Decisions of Listed Firms in Transport Equipment Industry in India

Shilpa

Amulya

2022

AJEBA

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Aims: The study predominantly attempts to examine the capital structure decisions of listed firms in Transport Equipment Industry by analyzing the relationship between leverage and profitability. Study Design: Descriptive research design is used to describe the characteristics of the firms belonging to industry. The study envisages an extensive use of data extracted from professional database CMIE prowess and from reports Ministry of Statistics and Programme Implementation, Annual Survey of Industries and Satista. Place and Duration of Study: The sample for the study consists of all listed firms National Stock Exchange (NSE) affiliated under Transport equipment Industry (CMIE classification). There were totally 86 firms as on 31st March 2018. The relevant data sets are retrieved for a period of 10 years (2008-2018). Thus, a panel data of 860 different observations were considered for study. Methodology: To analyze the data collected, Econometric model for longitudinal data with repeated measures known as Hierarchical linear regression model is adopted. This helps in estimation of industry grand mean, segment mean and firm mean for multilevel nested data. Results: The result of the study indicates that segment means are approximately equal to industry mean of 0.2898. Further, the segment-level means of all eight segments follows normal distribution with firms having high and low leverage firms. Finally, the firm-level variance is comparably high indicating that firms’ influence on capital structure decisions is predominant of all in this industry which has been found to be consistent over past decade. Conclusion: The underleveraged firms in Transport Equipment Industry exhibit relatively higher average Return on Equity (ROE) and Return on Capital Employed (ROCE) compared to optimal leveraged firms. On the other hand, overleveraged firms indicate inverse relationship with profitability. This is justified by the pecking order theory that higher profitable firms incorporate internally generated funds available at lower cost compared to external financing.

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Impact of Capital Structure on Profitability: Panel Data Evidence of the Telecom Industry in the United States

Cited by 20 publications

References 37 publications

The Impact of Intangible Capital on Firm Profitability in the Technology and Healthcare Sectors

The Impact of Intangible Capital on Firm Profitability in the Technology and Healthcare Sectors

Does the Size of the Business Still Matter, or Is Profitability under New Management, by Order of the COVID-19?

Capital Structure Decisions of Listed Firms in Transport Equipment Industry in India

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