Capital structure and value firm: an empirical analysis of abnormal returns

This study investigates whether capital structure is value relevant for the equity investor. In this sense, the paper links empirical corporate finance issues with investment analysis. This study also integrates the Miller-Modigliani (MM) framework (1958) into an investment approach by estimating abnormal returns on leverage portfolios in the time-series for different risk classes. For most risk classes, abnormal returns decline in firm leverage. Descriptive statistics, simple and multiple regressions are used to test the hold indicator significance. The results reflect that the designed measures are the negative relationship between returns and leverage could also be due to the market’s pricing of the firm’s ability to raise funds if need be. Further avenues for research in this area include examining the stock return performance of companies based on the changes in leverage of the firms relative to their risk classes. It would be particularly noteworthy to examine the rate at which the information content of said changes is incorporated in the share prices of companies as well as in their long run returns This study encompasses all non-financial firms across the five sectors that cover all the various classes of risk. This study investigates neither the determinants of multiple capital structure choices nor changes in capital structures over time. Our main goal is to explore the effect of capital structure on cumulative abnormal returns. This study also examine a firm’s cumulative average abnormal returns by measuring leverage at the firm level and at the average level for the firm’s industry. And also examine other factors, such as size, price earnings, market-to-book and betas.capital structure, agency cost, firm value.

Capital Structure and Market Power: Evidence from Jordanian Banks

This paper provides new insights into the way in which the capital structure and market power and capital structure and profitability are related. We used sample data of fourteen banks listed on the Amman Stock Exchange for the period from 2005 to 2008.We examine the dependent variable, which are expressed by total debt deflated by total assets, while the independent variables are Tobin Q, Growth, Profitability, Size, Ownership, Risk and Tangibility ratio. The OLS estimation results indicate that, at lower and higher ranges of Tobin’s Q, banks employ higher debt, and reduce their debt at intermediate range. This is due to the complex interaction of market conditions, agency costs, and bankruptcy costs. We also show the saucer-shaped relation between capital structure and profitability because of the interplay of agency costs, costs of external financing and interest tax-shield. We find that size tangibility variables have a positive influence both on capital structure and on the other hand on growth, while risk and ownership variables have a negative influence on capital structure.aknowledge, competitiveness, firm performance, knowledge-based theory

Testing the Relationship between the Effi ciency of Value Added Intellectual Coeffi cient and Corporate Performance at Commercial Banks in Amman Stock Exchange (ASE)

The principal purpose of the present paper is to investigate the association between the effi ciency of value added Intellectual Coeffi cient (VAIC) by the major components of a banks resource base {physical capital (CEE), human capital (HCE) and structural capital (SCE)} and three traditional dimensions of banks fi nancial performance. The three traditional dimensions of banks fi nancial performance are (1) profi tability, (2) productivity and (3) market valuation. The study Used 14 commercial banks data drawn from Amman Stock Exchange (ASE) reporting period 2002-2007. The paper used two models to testing, the fi rst between the Value Added Intellectual Coeffi cient (VAIC) as the effi ciency measure of three intellectual capital components and market valuation. The second model explores the relation between every intellectual capital variables as independent variables and banks fi nancial performance dimensions include return on assets, return on equity and employee productivity

The Impact of Economic and Financial Variables on Cash Conversion Cycle of Energy, Oil and Gas Sectors Listed in Muscat Security Market

This paper aims to analyze the impact of economic and financial variables on cash conversion cycle of energy, oil and gas sectors listed in Muscat Security Market. The study population include 13 firms  from 2008 to 2013 listed in Muscat Security Market and only 3 firms exception because the lack of complete data covering the period of study as new firms. The results show that there is a statistical significant impact of growth sales, firm size, cash flow as financial variables and average daily production of oil, consumer price index, total merchandise import and total government expenditure as economic variables on cash conversion cycle. Also results show that there is a statistical significant impact of all financial factors on cash conversion cycle. The researcher recommends to reducing the proportion of crude oil’s contribution to GDP and increasing the contribution of natural gas and diversifying the economy. Keywords: Energy; Oil and Gas Sectors; Cash Conversion Cycle; Economic and Financial Variables. JEL Classifications: C32; M21; Q43

Assessing the determinants of interest rate spread of commercial banks in Oman : an empirical investigation

This study aims to examine the factors that determine interest rate spread (IRS) of commercial banks listed on Muscat security market over the period 2008 – 2014. They are classified into four groups of financial, economic, market and legal indicators. The Spearman correlation matrix results show that all economic indicator variables have significant relationship with interest rate spread except GDP variable. No significant relationship exists between financial indicator variables and interest rate spread, but in legal indicator variables there is significant relationship with interest rate spread only in two variables the size of government and regulation. Finally, there is a significant relationship between market indicator based on market concentration measured by Herfindahl-Hirschman Index and interest rate spread. OLS regression analysis indicates a statistically significant impact on IRS by factors like return to asset ratio, liquidity risk and risk aversion within the financial group and unemployment rate, debt services ratio and principal repayment from the economic group and Herfindahl-Hirschman Index based on market concentration group. Finally, there is a significant impact of sound money and regulation within the legal group on IRS. The researchers recommend an adaptation in the monetary policy to exploit the high level of liquidity in the banking sector by facilitating easy access to debt to individuals as well as firms thus providing the margin competitive interest rate.peer-reviewe

Assessing the impact of structural indicators for the European Union banking system on economic evolution: an empirical investigation in EU

This study aims to investigate the impact of structural indicators for the European Union banking system on economic evolution. The methodological framework is the analysis of three variables of economic evolution. The econometric equation is built by regression test using annual data for the period 2008 to 2014. The indicators of the European banking system consist of fifteen independent variables and their impact on three economic variables consisting of GDP at current market prices, EMU convergence criterion bond yields (Maastricht criterion) and HICP annual average inflation rates are investigated on the growth in EU (dependent variable). The regression results show that there is statistical significant impact at different level 1%, 5% and 10% of all independent variables on EMU convergence criterion bond yields (Maastricht criterion), and in thirteen variables on GDP at current market prices except total assets of domestic banking groups and branches of credit institutions from rest of the world variables. Finally, only three variables total assets of domestic banking groups, branches of credit institutions from rest of the world and assets of pension funds have significant impact on HICP annual average inflation rates. The researchers recommend the need to build the financial stability in the banking system of the European Union with the continuity of modifying commercial legislation based on environmental changes and raise transparency to increase and diversify investments in the financial markets to reduce risk, and, thus, this will lead to increase in the level of social responsibility toward socialist economi