The Effect of Capital Structure on Corporate Performance: Panel Empirical Evidence of an Emerging Capital Market

Essel, Ronald Ebenezer

doi:10.1080/15228916.2023.2170856

Cited by 3 publications

(2 citation statements)

References 73 publications

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“…This study aligns with Sike et al (2022) and Nelson and Peter (2019), who also found limited influence of ATER on ROA under certain circumstances or contexts. On the other hand, it contradicts the conclusions of Amin and Cek (2023) and Essel (2023), suggesting potential variation across different banking environments or periods regarding how much impact an asset equity ratio has on ROAs. While ATER reflects the ratio of assets financed by equity, other factors such as operational efficiency, risk management practices, market conditions, and regulatory requirements also contribute to ROA.…”

Section: Asset-to-total Equity Ratiocontrasting

confidence: 69%

Effect of Capital Structure on the Financial Performance of Ethiopian Commercial Banks

Muhammed,

Desalegn,

Emese

2024

Risks

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This study aimed to examine the effects of capital structure on the financial performance of Ethiopian commercial banks. The dependent variable, financial performance, is measured by Return on Assets (ROA), while factors such as loan-to-deposit ratio (LDR), asset-to-total equity ratio (ATER), total deposit-to-total asset ratio (TDTAR), capital adequacy ratio (CAD), and asset growth ratio (GA) were used as proxy independent variables to gauge capital structure. Using a quantitative approach and an explanatory research design, this study analyzes 6 years of audited financial reports from 14 commercial banks in Ethiopia. This investigation employs a random effect regression model and Stata 14 software package to explore the relationships among these variables. The result revealed that both the loan-to-deposit ratio and the total deposit-to-total asset ratio have a positive and significant impact on financial performance, while the asset growth ratio showed a negative effect. Based on these findings, this study recommends that bank authorities concentrate on bolstering their deposit base, managing asset growth efficiently, maintaining adequate capital levels, and optimizing leverage levels to improve financial performance and ensure long-term sustainability in the banking sector. Additionally, this research is anticipated to inform policymakers about regulatory frameworks for banks and assist banking managers in formulating effective capital financing strategies within the Ethiopian commercial banking sector, thus enriching the existing literature on the relationship between capital structure and financial performance.

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Section: Asset-to-total Equity Ratiocontrasting

confidence: 69%

Effect of Capital Structure on the Financial Performance of Ethiopian Commercial Banks

Muhammed,

Desalegn,

Emese

2024

Risks

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“…Sebaliknya struktur modal yang tidak optimal yang ditandai dengan tingginya pendanaan yang bersumber dari utang mengirimkan pesan negatif kepada para investor. Investor menganggap tingginya pendanaan yang bersumber dari leverage berpotensi perusahaan tidak akan membagi keuntungan dan berpotensi mengalami kebangkrutan (financial distress) (Essel, 2023). Pada penelitian sebelumnya terdapat inkosistensi pada hasil penelitian mengenai return saham yang dipengaruhi oleh struktur modal.…”

Section: Pendahuluanunclassified

Impact of Capital Structure and Profitability on Stock Return of Manufacturing Companies Listed on the Indonesian Stock Exchange (IDX) in the Period 2018-2021

Zul Bay,

Kartomo,

Kumalasari

2023

JAE

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Impact of Capital Structure and Profitability on Stock Return of Manufacturing Companies Listed on the Indonesian Stock Exchange (IDX) in the Period of 2018–2021" is the study's title. This study investigates and summarizes the material influence of capital structure and profitability on stock returns. 65 manufacturing businesses that were listed on the IDX for the years 2018 through 2021 made up the survey sample. Purposive sampling was carried out using a targeted sampling strategy. Using the application program Eviews version 10, analyze the hypothesis using data panel regression analysis. According to the results of the analysis, capital structure (DER) and profitability (ROA) as simulants have no significant effect on stock return, whereas only capital structure as a partial has no significant effect on stock return and profitability as a partial has no significant effect on stock return.

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The Impact of Board Gender Diversity on European Firms’ Performance: The Moderating Role of Liquidity

Gharios,

Awad,

Abu Khalaf

et al. 2024

JRFM

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This study examines how board gender diversity affects listed non-financial European companies’ financial performance. Data from the Refinitiv Eikon Platform—LSEG and World Bank databases was used to complete the analysis. The total sample included 4257 companies for the period 2011–2023. This study examined board gender diversity and its interaction with liquidity while controlling for board characteristics such as board size, independence, and board meetings. Controlling for firm characteristics (firm size and leverage) and macroeconomic variables like inflation and GDP. This study estimated the connection using panel regression. Due to Hausman test significance, fixed effect estimation was used. The findings demonstrated a notable and favorable influence of board features, such as gender diversity, board independence, and board size, on European nonfinancial companies. Additionally, liquidity positively affects firm performance. Furthermore, the findings indicated that leverage had a significant negative impact on profitability. Finally, both the size and GDP have a significant beneficial impact on profitability. Our findings indicate that an increased representation of women on the board of directors is associated with greater independence among board members and a higher number of board members being hired. This, in turn, has a positive impact on profitability due to the extensive experience shared among board members. Additionally, this leads to improved governance, enabling better control over decisions and a greater focus on the long-term investment strategy of the company. Our results are robust, as are similar results reported by the GMM regression.

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The Effect of Capital Structure on Corporate Performance: Panel Empirical Evidence of an Emerging Capital Market

Cited by 3 publications

References 73 publications

Effect of Capital Structure on the Financial Performance of Ethiopian Commercial Banks

Effect of Capital Structure on the Financial Performance of Ethiopian Commercial Banks

Impact of Capital Structure and Profitability on Stock Return of Manufacturing Companies Listed on the Indonesian Stock Exchange (IDX) in the Period 2018-2021

The Impact of Board Gender Diversity on European Firms’ Performance: The Moderating Role of Liquidity

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