Stock market liquidity, family ownership, and capital structure choices in an emerging country

Market liquidity and capital structure: Does it really matter for Vietnam’s family ownership?

“…Moreover, the above results confirm an exciting conclusion for corporate capital literature since it appears that family power (or also family ownership) -concerning the multiplier mechanismcan make the company reluctant to receive more share equity, and prefer more debt (Céspedes et al, 2010;ElBannan, 2017;King & Santor, 2008;Setia-Atmaja et al, 2009;Sharma & Paul, 2015). For Vietnam's context, with respect to the link between market liquidity and capital structure, this finding has profoundly differentiated with all previous papers Dang et al 2019 1198 Notes: The table shows the panel quantile regression for causal relationship between market liquidity (respected by three different dimensions of illiquidity, share turnover ratio, and modified turnover) and corporate leverage (two proxies of log of debt and market leverage) as the company is argued to be controlled by the level of family's power (the number of people who hold the important positions or obtain the high proportion of shares, have the relative relationship with the directors).…”

“…At this time, the noticeable increase of market liquidity can lower the cost of equity and would lead equity to be more attractive than debt, which will decrease the percentage of debt in the corporate capital structure (Udomsirikul et al, 2011). As a result, under the mechanism of asymmetric information, the Pecking Order preference and the trade-off of the costs of debt would motivate the firm to issue equity when there is higher liquidity instead of debt (ElBannan, 2017;Fama & French, 2002). , Frieder and Martell (2006), Lipson and Mortal (2009), and Kryzanowski, Lazrak, and Rakita (2010) tested the relationship between stock market liquidity and corporate capital choice, agreed that there is a significant negative effect of the level of security liquidity toward firm leverage.…”

“…Third, following Udomsirikul et al (2011), andElBannan (2017), the liquidity is measured by the modified turnover ratio which specified as the weekly number of traded shares divided by the multiplication between a total number of outstanding shares and volatility of earning:…”

How do equity markets react to COVID-19? Evidence from emerging and developed countries

“…More specifically, the emerging countries have been identified to have a weaker healthcare infrastructure ( Hsiang et al, 2020 ; McKibbin & Fernando, 2020 ). Furthermore, the capital markets in emerging countries generally have lower liquidity and more significant information asymmetry than the developed markets ( Bhagat, Malhotra, & Zhu, 2011 ; ElBannan, 2017 ; Khanna, Palepu, & Sinha, 2005 ). Therefore, any unexpected global economic shockwave to the emerging markets significantly increases the uncertainties and adversely affects their financial markets ( Tran, Hoang, & Tran, 2018 ).…”

Manfaat Laba Untuk Menambah Utang Dan Mengurangi Pajak

“…Persaingan bisnis mendorong manajemen untuk membuat keputusan yang tepat terkait pendanaan korporasi yang mengombinasikan antara pinjaman korporasi dengan kepemilikan modal untuk memperoleh susunan modal yang optimal bagi korporasi ritel (ElBannan, 2017;Jadiyappa, Vanga, & Krishnankutty, 2016). Susunan modal optimal diperoleh jika korporasi mampu menggabungkan dengan tepat di antara pinjaman dan efek korporasi bersama biaya dan risiko yang ditimbulkan atas keputusan pendanaan (Febrininta & Siregar, 2014;Yusuf & Gasim, 2015).…”