The capital structure puzzle – evidence from Indian energy sector

Chakrabarti, Anindita; Chakrabarti, Ahindra

doi:10.1108/ijesm-03-2018-0001

Cited by 49 publications

(62 citation statements)

References 18 publications

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“…In this research, sales growth is proxied with the percentage of average annual growth in total sales (Robinson, 2009). Proxy about this sales growth beforehand had been used in the research by Ganguli (2013), Yazdanfar & Öhman (2014), Alipour, Mohammadi, & Derakhshan (2015), and Chakrabarti & Chakrabarti (2018). The formula for sales growth is:…”

Section: Method Data and Analysismentioning

confidence: 99%

Determinants of capital structures based on the Pecking Order Theory and Trade-off Theory

Simatupang

Purwanti

Mardiati

2019

Jurnal Keuangan Dan Perbankan

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Determining the decision of the company capital structure is a very important thing because it influences the development of resources potency and the sustainability of a company. Related to deciding on the capital structure, there is still different perception so far between pecking order theory and trade-off theory. This research aims to know the effect of profitability, sales growth, non-debt tax shield, the tangibility of assets, and funding surplus towards the capital structure of non-financial companies listed in Indonesia Stock Exchange (IDX) period 2014-2017. The research method used was Causal-Comparative Research with samples investigated were panel data of 154 non-financial companies experiencing funding surplus with total observation in the amount of 616. The result of this research shows that non-debt tax shield and growth sales do not affect company capital structure. Besides that, funding surplus has a positive effect on the capital structure, while profitability and tangibility assets have a negative effect on the capital structure. Abstrak Penelitian ini bertujuan untuk mengetahui pengaruh antara profitabilitas, pertumbuhan penjualan, non debt tax shield, tangibility of asset, dan surplus pendanaan terhadap struktur modal pada perusahaan non keuangan yang terdaftar di Bursa Efek Indonesia (BEI) periode tahun 2014-2017. Metode penelitian yang digunakan adalah kausal komparatif (Causal-Comparative Research) dengan sampel yang diteliti yaitu 154 perusahaan non keuangan yang mengalami surplus pendanaan. Teknik pengambilan sampel yang digunakan yaitu purposive sampling. Hasil penelitian ini menunjukkan bahwa non-debt tax shield tidak berpengaruh terhadap struktur modal perusahaan. Selain itu, pertumbuhan penjualan, tangibility assets, dan surplus pendanaan memiliki pengaruh yang positif terhadap struktur modal, sedangkan profitabilitas memiliki pengaruh negatif terhadap struktur modal.

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Section: Method Data and Analysismentioning

confidence: 99%

Determinants of capital structures based on the Pecking Order Theory and Trade-off Theory

Simatupang

Purwanti

Mardiati

2019

Jurnal Keuangan Dan Perbankan

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“…The last group of empirical findings presented in Appendix A includes papers on firm-specific determinants of capital structure in energy industry [22][23][24]27,28,45]. They are characterized by less heterogeneity than in the cross-sectional studies.…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

“…Despite the energy industry's substantial economic impact, as well as its specific ownership structure, the financial behavior of companies in this industry is relatively rarely studied [22][23][24][25][26][27][28][29][30]. The indicated research gap becomes particularly relevant for Europe in the context of the common EU energy policy.…”

Section: Introductionmentioning

confidence: 99%

Determinants of Enterprises’ Capital Structure in Energy Industry: Evidence from European Union

Jaworski

Czerwonka

2021

Energies

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The aim of the study is to identify the main determinants of the capital structure of energy industry companies in the European Union. The study was based on a panel of 6122 companies from 25 EU countries, operating between 2011 and 2018. The study used multiple regression analysis. We have obtained strong evidence for a positive relationship between corporate debt and tangibility and size, and a negative relationship for profitability and liquidity. The factors that also affect the share of debt in capital have turned out to be growth (positive relationship) and non-debt tax shield (negative relationship), but the statistical significance of these relationships is ambiguous. We have shown that growth of industry business risk is accompanied by an increase in corporate debt and this is a distinguishing feature of the energy industry. For country-specific capital structure determinants, we have obtained strong evidence for the negative relationship between GDP growth, the level of stakeholder rights protection, the degree of capital markets development, and indebtedness of the companies studied. There has been moderate support for the hypotheses of a positive effect of inflation, taxation, and the degree of financial institutions development. Our study has also shown a negative impact of the volume of energy consumption and the share of renewable sources in its production and a positive impact of market monopolization on the indebtedness of companies from the energy industry in the EU.

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“…Handoo and Sharma (2014) concludes that there is a significant impact of factors such as profitability, growth, asset tangibility, size, cost of debt, tax rate, and debt serving capacity on the leverage structure. Chakrabarti and Chakrabarti (2019) find the asset turnover ratio, age, size and liquidity are the significant causal factors of capital structure of Indian energy companies. In contrast, profitability, debt service capacity, tangibility ratio, non-debt tax shield and sales growth are insignificant determiner.…”

Section: Literature Reviewmentioning

confidence: 87%