Factors Affecting Capital Structure and Stock Prices of Agricultural and Mining Companies

The purpose of this study was to analyze the influence of business risk, asset growth, sales growth, earning per share, and asset structure to capital structure and share price. This study involved mining and agriculture companies listed on IDX within the period of 2010-2017. The analysis employed eViews 9. Based on the hypothesis testing, it was found that that business risk, sales growth, and asset structure do not have a significant effect on capital structure. However, asset growth has a significant influence. Furthermore, sales growth and EPS do not have a significant effect on share price, but the asset structure has a significant influence. This research is a development of previous research by adding earnings per share as an independent variable and covering the period 2010 - 2017 in order to show the most actual conditions. Company management can make the results of this study a consideration in determining the optimal capital structure.   This study only examined the mining and agricultural sectors on the Indonesian stock exchange

Human Capital, Bankruptcy and Capital Structure

We derive a firm's optimal capital structure and managerial compensation contract when employees are averse to bearing their own human capital risk, while equity holders can diversify this risk away. In the presence of corporate taxes, our model delivers optimal debt levels consistent with those observed in practice. It also makes a number of predictions for the cross-sectional distribution of firm leverage. Consistent with existing empirical evidence, it implies persistent idiosyncratic differences in leverage across firms. An important new empirical prediction of the model is that, ceteris paribus, firms with more leverage should pay higher wages.

Factors Affecting Capital Structure of Conventional and Islamic Banks: Evidence From MENA Region

This study aim is to investigate and compare the factors affecting conventional and Islamic bank\u27s capital structure choice as well as their financial characteristics. According to the best of my knowledge, this is the first paper that mainly concentrated in comparing the determinants of capital structure of conventional and Islamic banks using a cross-country data and for a long period of time (20 years). The study revealed several findings. Firstly, descriptive statistics (equality of means test) showed that conventional banks more leveraged and liquid than Islamic banks. In contrast, Islamic banks are larger and more profitable (ROA) than conventional banks. The results also indicated that Islamic banks are not riskier than conventional banks. Secondly, the regression results showed that all variables, except tax-shield, had the same impact on both banking types capital structure. It been found that profitability, tangibility, business risk and age correlated negatively and significantly with capital structure. In the other direction, size, liquidity and inflation had significant and positive relation with capital structure. Vis-à-vis tax-shield, this variable had a weak impact (positive) on Islamic bank\u27s capital structure but had no effect on conventional banks and this attributed to Islamic banks sample

Empirical Capital Structure Research: New Ideas, Recent Evidence, and Methodological Issues

Even 50 years after Modigliani/Miller’s irrelevance theorem, the basic question of how firms choose their capital structure remains unclear. This survey paper aims at summarizing and discussing corresponding recent developments in empirical capital structure research, which, in our view, are promising for future research. We first present some “stylized facts” on capital structure issues. The focus of the discussion is set on studies taking on the key idea to differentiate between competing theories by testing for firm adjustment behavior following shocks to their capital structure. In addition, we discuss empirical studies examining additional factors that may influence capital structure decisions, but have gained only recently attention in the literature (like corporate ratings or irrational managers). Since some of the available contradictory evidence on capital structure issues might be explained by econometric challenges due to the typical data structure, we also discuss methodological issues like panel data, endogeneity, and partial adjustment models in the capital structure context. Finally, we illustrate the methodological and empirical aspects discussed in this survey by providing corresponding evidence for exchange-listed German companies in the period 1987-2006

Capital Gains Taxes, Irreversible Investment, and Capital Structure.

This paper studies the corporate policy distortions caused by realization-based capital gains taxation at the personal level in a dynamic trade-off theory model. The Lock-in effect of embedded capital gains creates severe conflicts of interest between incumbent and new investors. The firm's optimal policy exhibits path-dependency and non-stationarity, since the taxe basis of the firm's owners is a valuable conditioning variable for corporate decisions. Ex-ante identical firms follow very different investment and financial policies depending on their stock price evolution. Firms delay irreversible investment further the lower tax basis of their owners falls. The reason is the investment hedge provided by personal tax loss offsets weakens as investors reset their basis. Capital gains taxation also creates incentives to time equitzy issues. Firms employ more equity in their capital structure the higher the stock price-to-basis ratio, since locked-in investors with out-of-the-money tax timing options value the firm less than the market. The value gain from conditioning on the owner's tax basis is substantial. Using simulated data I show the combined effects are consistent with recent empirical evidence on the relation between leverage, Tobin's Q, and past performance.Capital Gains Taxation, Real Options, Capital Structure, Trade-off Theory, Market Timing.

Inflation and Capital Structure

This essay is a contribution to the empirical literature on the effect of inflation tax on capital structure. A simple empirical model considering the main results of the current theoretical development is studied, using microdata from a number of American corporations.inflation tax, capital structure, firm value, debt-capital ratio

Inflation and Capital Structure

This essay is a contribution to the empirical literature on the effect of inflation tax on capital structure. A simple empirical model considering the main results of the current theoretical development is studied, using microdata from a number of American corporations.

The short term debt vs. long term debt puzzle: a model for the optimal mix

This paper argues that the existing finance literature is inadequate with respect to its coverage of capital structure of small and medium sized enterprises (SMEs). In particular it is argued that the cost of equity (being both conceptually ill defined and empirically non quantifiable) is not applicable to the capital structure decisions for a large proportion of SMEs and the optimal capital structure depends only on the mix of short and long term debt. The paper then presents a model, developed by practitioners for optimising the debt mix and demonstrates its practical application using an Italian firm's debt structure as a case study