The Effect of Capital Structure on Profitability: An Empirical Panel Data Study

Singh, Narinder Pal; Bagga, Mahima

doi:10.1177/2278682118823312

Cited by 74 publications

(53 citation statements)

References 13 publications

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“…The following regression model is used in this study to examine the empirical effect of capital structure on the financial performance of Nepalese insurance companies. The following models have been used to examine the empirical effect based upon previous studies of Berger (1995); Rajan and Zingales (1995); Sunder and Myers (1999); Zeitun and Tian (2007); Goyal (2013); Singh and Bagga (2019).…”

Section: Model Specificationmentioning

confidence: 99%

“…Capital structure is measured with the help of capital structure variables as total debt ratio (TDR) and equity to total assets (ETA) and control variables as firm size (SIZE), liquidity (LQ), and assets tangibility (TAN). Financial performance is measured with the help of two variables namely the return on assets (ROA) and earnings per share (Berger, 1995;Rajan & Zingales, 1995;Sunder & Myers, 1999;Zeitun & Tian, 2007;Goyal, 2013;Singh & Bagga, 2019).…”

Section: Conceptual Frameworkmentioning

confidence: 99%

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Capital Structure and its Impact on Financial Performance in Insurance Companies of Nepal

Jaishi

2020

Journal of Nepalese Business Studies

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The paper attempts to examine the relationship between capital structure and the financial performance of Nepalese insurance companies. Return on assets and earnings per share are the dependent variables. Independent variables are total debt ratio, equity to total assets ratio, size, liquidity and tangibility. This paper uses descriptive as well as causal-comparative research design to examine the general structure of capital structure and financial performance and their relationship. The data were collected from annual reports of listed insurance companies in Nepal. The study is based on 84 observations from 14 insurance companies of Nepal from 2013/14 to 2018/19. The regression models are estimated to test the effect on financial performance variables i.e. return on assets and earnings per share. The result shows that insurance companies having a high debt ratio have better financial performance. An increase in debt ratio and tangibility increase return on assets and an increase in equity, size and liquidity decrease return on assets in the industry. The impact of the debt ratio and tangibility on earning per share is positive and there is the negative impact of equity, size and liquid ratio on earning per share. The major conclusion of this study is that total debt ratio, equity to total assets ratio, leverage, size, liquidity and tangibility are the significant factors in determining the financial performance of Nepalese insurance companies. The insurance companies of Nepal interested to increase financial performance can increase their total debt ratio and tangible assets and decrease equity, firm size, and liquidity ratio.

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Section: Model Specificationmentioning

confidence: 99%

Section: Conceptual Frameworkmentioning

confidence: 99%

Capital Structure and its Impact on Financial Performance in Insurance Companies of Nepal

Jaishi

2020

Journal of Nepalese Business Studies

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“…The following regression model has been used in the study to examine the empirical effect of firm specific factors on the financial performance of Nepali insurance companies. The following models have been used to examine the empirical effect based upon the previous studies of Berger (1995), Rajan and Zingales (1995), Sunder and Myers (1999), Zeitun and Tian (2007), Goyal (2013) and Singh and Bagga (2019). The function of dependent variables (i.e.…”

Section: Model Specificationmentioning

confidence: 99%

Impact of Firm Specific Factors on Financial Performance: A Comparative Study of Life and Non-Life Insurance Companies in Nepal

Jaishi

Poudel

2021

Prithvi Acad. J.

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The empirical research has been carried out to examine the firm specific factors composition and its impact on financial performance of life and non-life insurance companies in Nepal. This paper employs the descriptive as well as causal-comparative research design. The study comprises of a panel data set of 14 insurance companies listed in Nepal Stock Exchange (NEPSE) with 140 observations covering a period of 10 years from 2009/10 to 2018/19. The result exhibits that the insurance companies having a high debt ratio have better financial performance. It also reveals that a higher proportion of debt ratio and tangible assets increases return in assets. On the other side, a lesser proportion of equity, firm size and liquidity decreases the return on assets of the insurance companies in Nepal. The study raises understanding of impacts of firm specific factors on financial performance and provides an empirical evidence that the total debt ratio, equity to the total assets ratio, leverage, firm size, liquidity and tangibility are the significant factors in determining the financial performance of Nepal’s insurance companies. The non-life insurance companies tend to perform better in term of financial performance measured by earning per share and return on assets. The study leads to practical implications for insurance companies and regulatory bodies. The insurance companies of Nepal interested to improve their financial performance should focus on increasing their leverage and long-term investment and decreasing the proportion of equity, firm size and liquidity.

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“…Yuksel dkk melakukan penelitian pada sektor Perbankan yang mengidentifikasi bahwa determinan profitabilitas bank di 13 Negara pasca-Soviet menemukan bahwa jumlah pinjaman, pendapatan non-bunga dan pertumbuhan ekonomi adalah indikator profitabilitas yang signifikan (Yüksel, Mukhtarov, Mammadov, & Özsarı, 2018). Singh & Bagga pada penelitiannya menyebutkan bahwa adanya pengaruh positif yang signifikan dari struktur modal pada profitabilitas perusahaan (Singh & Bagga, 2019).…”

Section: Latar Belakangunclassified

Pengaruh Leverage, Ukuran Perusahaan dan Inflasi terhadap Profitabilitas Pada Bank Umum Syariah di Indonesia

Syafi'i

Haryono

2021

MALIA

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The company has orientation to gain profit in carrying out business activities. There are factors that affect the company's profitability, both internally and externally. Company management, must control their financial ratios and consider macroeconomic and environmental conditions because these factors can affect the company's profitability. The purpose of this study is to examine the effect of leverage, firm size and inflation on the profitability of Islamic Commercial Banks in 2012-2019. This type of research is quantitative research. The object of this research is the banking sector companies, namely Islamic Commercial Banks registered with the Financial Services Authority (OJK) in the period 2012 to 2019. The sampling technique used is purposive sampling technique. The method used for data analysis is panel data regression, which is a combination of cross section data and time series data using data from 10 Islamic Commercial Banks. The findings of this study indicate that the leverage that uses the DER indicator partially has a significant positive effect on the profitability of Islamic banking, which uses the ROA indicator. Furthermore, the size of the company that uses the indicator Ln Assets and Inflation does not have a significant partial effect on profitability at Islamic Commercial Banks, but has a simultaneous effect. The variables of leverage, firm size, and inflation simultaneously affect the profitability of Islamic Commercial Banks.

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The Effect of Capital Structure on Profitability: An Empirical Panel Data Study

Cited by 74 publications

References 13 publications

Capital Structure and its Impact on Financial Performance in Insurance Companies of Nepal

Capital Structure and its Impact on Financial Performance in Insurance Companies of Nepal

Impact of Firm Specific Factors on Financial Performance: A Comparative Study of Life and Non-Life Insurance Companies in Nepal

Pengaruh Leverage, Ukuran Perusahaan dan Inflasi terhadap Profitabilitas Pada Bank Umum Syariah di Indonesia

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