Survey Evidence on Financing Decisions and Cost of Capital

Bancel, Franck; Mittoo, Usha R.

doi:10.1002/9781118266250.ch13

Cited by 5 publications

(1 citation statement)

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“…According to Titman (1988), specialized industry companies should have higher leverage compared to manufacturing companies. Similarly, large companies may take on higher leverage in order to be more diversified and thus, have lower bankruptcy risks, according to Anget al (1982).In fact, many studies are conducted to investigate the factors that play a role in shaping companies' debt policy; for example, Bancel and Mittoo (2011) indicate that level of interest rates, credit ratings, share price, flexibility, and tax advantage of debt all affect the financing decisions of companies in Europe. However, the determinants of capital structure vary from one industry to another and from one country to another, as the literature indicates.…”

Section: Determinants Of Capital Structurementioning

confidence: 99%

The Determinants of Capital Structure: Empirical Analysis of Oil and Gas Firms during 2000-2015

Shambor

2017

AJFA

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This study investigates the capital structure determinants of 346 oil and gas firms that are the constituents of the Global Oil and Gas Index (OILGSWD) over the period of 2000 -2015, taking into account the effect of the Global Financial Crisis of2007-2009 on the determinants of the capital structure. Thus, six firm level explanatory variables (namely: liquidity, profitability, growth, non-debt tax shield, tangibility and size) are selected and regressed against the appropriate capital structure measure, leverage, the ratio of total debt to book value of total assets. The data is collected from secondary sources depending on the data from the DataStream database. The major findings of the study indicate that tangibility, profitability, size, liquidity and non-debt tax shield are the significant determinants of capital structure of oil and gas firms, while growth is considered insignificant. The capital structure is analyzed in terms of the three main theories of capital structure: Trade-off theory, Pecking order theory, and Agency cost theory. Finally, the global financial crisis has to some extent a significant impact on the capital structure determinants of oil and gas firms and has no significant impact on liquidity, as indicated by the OLS regression analysis results.

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Section: Determinants Of Capital Structurementioning

confidence: 99%