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Shariah screening discards the firms that belong to impermissible business sectors (or sin industries) and follow capital structure with high debt and current assets. This study tests whether the firms passing Shariah screening have better (or worse) governance quality as compared to firms not subjected to Islamic screening. The screened firms may have lesser governance quality as they cannot use debt to discipline managers or achieve optimal capital structure. On the contrary, they may be better governed as these firms get higher presence of institutional investors and better analyst coverage. This paper provides comparison of governance quality of Shariah compliant (SC) firms in United States by using proprietary dataset of Dow Jones US Indices. The screened firms offer ground for a natural experiment as they pass negative ethical screening and meet financial criteria for the inclusion in the index. The findings suggest that the SC firms have lesser governance quality than Shariah Non-Compliant firms. The lower level of governance can be attributed to lower Size, lower Profitability, higher Dividend Payout, higher Total Risk and lower Free Cash Flow. Various robustness tests are performed to validate the findings and the results remained robust. These findings provide useful insights about the governance mechanism of SC firms that are emerging as an important alternative investment class in the last two decades.

Since project finance is based on loans with no or limited recourse on project sponsors, both lenders and SPV shareholders must carefully assess the ability of the venture to generate sufficient cash flows to repay operating costs, debt service, and dividends to sponsors. In turn, interest and principal payments on loans, together with dividends, are determined by the selected capital structure (i.e., the mix of debt, subordinated debt, and equity) agreed between banks and shareholders. In this chapter, we first focus on the estimation of project cash flows during the different life cycle phases of the initiative and analyze the set of inputs needed for the valuation. Then, in Section 2, we discuss how to identify a sustainable capital structure. Sustainability is based on a satisfactory level of profitability for shareholders and banks but also requires the assessment of financial sustainability by means of specially designed cover ratios (Section 3). Section 4 presents an introduction to the valuation of project risk and the use of simulation techniques, sensitivity, and scenario analysis.

This paper examines the effects of country-level governance—such as voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption—on the capital structure and investment financing decisions of firms. The full sample consists of 31,749 firms in 65 countries between 1996 and 2017. We find that firms operating in countries with stronger governance decrease their leverage while increasing their debt maturity. Specifically, we show that they decrease their reliance on short-term debt issuance while they increase their reliance on long-term debt and equity issuances in financing capital expenditures. Our findings are robust to endogeneity issues and alternative model specifications.

This chapter tries to solve the problem of optimal capital structure. After redefining the concepts of tax shield and bankruptcy cost, based on the MM models and Black-Scholes model, this chapter derives the ZZ tax shield model and the ZZ bankruptcy cost model, and finally solves the problem of optimal capital structure by deriving the ZZ optimal leverage model or the ZZ optimal capital structure model. The ZZ leverage model reveals that there is indeed an optimal debt ratio for every firm on certain time, but the value-added from optimizing its debt ratio is very limited. Just as other ZZ model series, the forms and the variables of the ZZ model series on leverage are also derived via strict logic processes rather than chosen subjectively. Hence, the ZZ model series on leverage can be easily extended to accommodate various decision situations and more conditional factors, such as abnormal growth, bankrupt expectancy, debt guarantee, transaction cost, personal income tax, etc. and can as well be used to explain better most of the other long-lasting capital structure puzzles.

PurposeThis paper has three main purposes. First, this paper aims to study the effect of corporate social responsibility (CSR) on firm financial performance. Second, this study aims to examine how mandatory CSR disclosure impacts financial performance. Further, this paper aims to investigate the intervening role of capital structure decisions on the relationship between CSR and financial performance.Design/methodology/approachBased on a sample of French non-financial listed companies over the period 2006–2017, this study uses structural equations modeling and a difference-in-differences approach to highlight these effects.FindingsThis paper finds that CSR has a significant positive association with financial performance. In addition, although the mandate does not require firms to spend on CSR, the socially responsible firms experience an increase in profitability subsequent to the mandate. Finally, this study argues and finds evidence that the relationship between CSR and financial performance is mediated through the capital structure channel.Originality/valueThis paper contributes to the literature in several ways. First, the study provides a new research stream by examining the effect of mandatory CSR disclosure on firm financial performance. Second, is to knowledge the first to examine whether and how CSR affects financial performance through the capital structure channel.

PurposeThe purpose of this paper is to establish the mediating role of cost of capital in the relationship between capital structure and loan portfolio quality in Uganda's microfinance institutions (MFIs).Design/methodology/approachA cross-sectional research design was adopted to collect data and partial least squares structural equation modelling was used to test the study hypotheses.FindingsCost of capital partially mediates the relationship between capital structure and loan portfolio quality. Hence, cost of capital acts as a conduit through which capital structure affects loan portfolio quality.Research limitations/implicationsCost of capital was generalized as financial and administrative costs. The impact of costs like dividend pay-outs, interest rates and/or loan covenants on loan portfolio quality could be investigated individually.Practical implicationsMFIs should be vigilant about loan recovery by using strategies like credit rationing to ensure timely repayments.Originality/valueThe study contributes to the ongoing academic debate by identifying the significant indirect role of cost of capital in explaining loan portfolio quality.

This research is aimed to determine the effect of the profitability, company size, growth and taxes on the infrastructure, utilities, and transportation sector companies’capital structure which are registered in the Bursa Efek Indonesia. The dependent variable on this research is capital structure while the independent variables on this research are profitability, company size, and growth. The data used in this research is secondary data which is taken from the company’s annual financial report. Meanwhile, the population of this research is infrastructure, utilities, and transportation sector companies which are registered in the Bursa Efek Indonesia. The sampling technique used is purposive sampling method within the final sample of 186 companies have been obtained. The analysis technique used is panel data regression analysis by using Eviews 10 program. The result shows that profitability and company size give negative effect toward capital structure. Meanwhile, growth have no effect toward capital structure.

Islamic banks require a different performance measurement than a conventional bank to keep their sustainability. The main disadvantage of employing conventional benchmarks to measure Islamic bank performance is that they fail to investigate shariah facets. This study aims to discover how maqashid shariah index using IMSPM (Integrated Maqashid al-Shariah based Performance Measure) approach and firm value using EVA (Economic Value Added) approach and examine its impact with capital structure on the corporate values of Islamic bank. This study using a quantitative method with the purposive sampling technique. This study involved 11 Islamic bank’s annual reports listed in the Bank Indonesia and OJK from 2015 to 2019 period. The analysis method is multiple linear regression using Eviews 10 program. This study finds that the sample performed highest on the objective of nafs (self) over five-year period. The companies with a constant NOPAT and IC have a better EVA. Maqashid Syariah Index positively influence firm value while the capital structure has no effect.

Whether a private bidder can win a concession depends largely on advanced financial engineering techniques, numerous methods were developed. Meeting large infrastructure needs including its proper maintenance and operation is and will remain a major challenge for the all-around the in the coming years requiring targeted innovative financing mechanisms. Even though it is recognized that there are three types of financial instruments, equity, mezzanine finance and debt in funding an infrastructure project, the status quo is that previous capital optimization methods did not consider mezzanine finance or simply categorized it into debt-like or equity-like instruments. The global infrastructure sector is witnessing a steady growth of private equity investment in mezzanine instruments. The frequent usage of the contingent claim embedded in mezzanine financing makes the traditional model for capital structure optimization invalid. This study presents a more advanced method to optimize capital structure in infrastructure financing. This easily implemented method is based on a two-stage procedure: I) identification of optimal stopping time for convertible securities, and II) capital structure optimization by a conventional model. The quantitative optimization model can be easily generalized. The global infrastructure sector is witnessing the continued growth of a private equity fund of mezzanine tools. Repeated use of potential claims embedded in mezzanine financing has invalidated the traditional model for optimizing capital structure.

The capital market in Indonesia includes many companies from several sectors. One company that cannot be separated from the Indonesian stock market is a consumer goods company. The research aimed to analyze the effect of profitability and capital structure on the company with dividend policy as moderating variable to the consumer goods companies registered on the Indonesia Stock Exchange in the period of 2014-2018. The population in the research was consumer goods companies with subsector of food and drink, cigarette, cosmetic pharmacy, and household goods and appliances. The research applied purposive sampling and obtained 15 companies with 5 years of observation or around 75 samples. Then, the data were analyzed using Smart PLS 3.0. The analysis result shows that profitability, capital structure, and company size positively and significantly influence the company value. However, dividend policy cannot moderate the effect of profitability and capital structure on the company value. The dividend policy can moderate the effect of company size on the company value. Then, profitability, capital structure, and company size influence the company value of 88,6%, while the other factors influence the rest. Investors should decide on issuers with high profitability above 5%, the optimal capital structure with the debt-to-equity ratio between 0,8-1,2, and total assets above five trillion Rupiah.

Research background: Indebtedness indicators are used to monitor the structure of corporate financial resources. The company's share of its own and foreign resources affects the financial stability of the company. A high share of own re-sources makes the company stable, and independent. With a low share, on the contrary, the company is unstable, market fluctuations and credit uncertainty can have serious consequences. However, foreign capital is cheaper, and too high indebtedness ratios can jeopardize the existence of enterprises. Purpose of the article: In general, the economic recession worsens the capital structure of enterprises, especially their debt management. Thus, the paper aims to apply the set of 13 indebtedness ratios to a sample of 779 Slovak and Czech enterprises from the construction sector to determine key microeconomic determinants that may influence the level of indebtedness. Methods: A non-parametric one-way analysis of variance ? the Kruskal-Wallis test ? was used to determine whether the set of indebtedness ratios is the same across countries, districts, and sizes. For analyzing the specific sample pair of stochastic dominance, the pairwise comparison was realized using the Dunn'stest with Bonferonni correction. The Mann-Whitney test was used to compare the differences in the set of indebtedness ratios between two independent groups of enterprises, based on their legal form and country. Findings & value added: The level of total indebtedness ratio and the self-financing ratio depends on the region as well as on the size of the enterprise and the legal form. In the case of credit indebtedness and debt-to-cash-flow indebted-ness, their dependence on the size of the enterprise and the legal form is obvious. The importance of the region and the legal form of enterprises, vice versa, affect the level of the financial independence ratio. These outputs are relevant for au-thorities, policy makers, or financial institutions to identify financial constraints that construction enterprises face and, as a result, make a long-term contribution to theory in this field.

Research on the capital structure of family firms has flourished in recent years, but the impact of performance aspiration and family ownership together on capital structure remains inadequately investigated. Therefore, the purpose of this study is to explore the impact of family ownership and under-aspiration performance and their interaction on capital structure. Panel data estimations were applied with a unique dataset of 3.857 observations from 387 public firms in Vietnam from 2010 to 2020 (134 family firms and 253 non-family firms). The results reveal that family ownership and under-aspiration performance each has a positive effect on capital structure. However, under-aspiration performance negatively moderates the positive effect of family ownership on capital structure. These findings contribute to a stream of studies on the capital structure of family firms by exploring the role of under-aspiration performance, as well as provide important implications for shareholders, managers and debtors in financial management.

This paper uses biographical information of executives and directors of REITs in the US to show whether, and through what channels, top executives of REITs are influenced by their social peers when determining capital structure risk control strategies, especially in critical periods. Our focus is on the period of the 2007–2009 Financial Crisis. We find that peer influence through past employment and sharing activities significantly facilitate peer learning in making decisions on debt maturity extension, but does not affect leverage reduction. We find that being educated from the same school carries some effects on leverage reduction, possibly via its influence on managers’ personal traits. However, concurrent employment does not play a role in determining either of the strategies. We further verify the existence of influence of social network in decision making of REITs in 2015 in preparation for a boom at the beginning of the up-market. Hence, our study highlights the strength of peer connections in clarifying possible sources of herding in REITs decisions.

the crisis state of the national economy is accompanied by a decrease in economic activity. The financial performance of real sector organizations is deteriorating, and the capital structure is changing. In unstable conditions, accounts payable and accounts receivables become sources of financial resources. The purpose of the study is to show that in unstable periods, the use of such sources of financing as accounts payable and receivables differs from the use in normal conditions. Two hypotheses were put forward for these categories. First, the hypothesis is put forward that in crisis conditions there is an increase in the volume of accounts payable in comparison with accounts receivable. Second, it is logical to assume that with the growth of long-term liabilities (loans and borrowings), accounts payable grow faster than accounts receivable. The study sample consisted of data from more than two thousand organizations. The study covered three industries: wholesale, electric power, and mining. Data was taken from 2014 to 2018 from the SPARK database. The calculations allowed us to see some regularities concerning the sources of financing of organizations in the real sector of the economy, which are not very marked in textbooks. For example, accounts payable cover immobilized resources in the form of accounts receivable at enterprises that distribute electricity and engage in wholesale trade in non-food products. In crisis conditions, this position is justified. On the other side are enterprises where accounts payable do not cover accounts receivable (wholesale food and electricity). The consequences for them in times of crisis can be more serious. Another pattern is that mining companies and organizations that produce electricity, in crisis conditions, increase long-term obligations. This may mean that businesses in these industries have access to cheaper sources of financial resources.

The practice of accounting conservatism, determination of capital structure, and firm performance are important elements in influencing firm value, either directly or through moderation. Firm performance as a reflection of company`s policy plays an important role as a variable that can moderate this influence. Thus, this study aims to examine the role of firm performance in influencing firm value, particularly in moderating the effect of accounting conservatism and capital structure. To test this role, managerial ownership and institutional ownership are viewed as control variables. A total of 43 manufacturing companies from the Indonesia Stock Exchange (IDX) were sampled from 153 manufacturing companies listed from 2017 to 2019 to achieve this target. The data collection approach in this study was purposive sampling, and the data analysis method was multiple regression. The results showed a statistically significant positive effect between accounting conservatism and firm value, while the capital structure had no statistically significant effect. Firm performance acts as a moderating variable of accounting conservatism and capital structure in influencing firm value. The results of this study also confirm that managerial ownership and institutional ownership do not function as control variables in controlling the effect of accounting conservatism and capital structure on firm value. Whereas managerial and institutional ownership is expected to encourage managers to carry out policies that are oriented towards increasing the firm value. AcknowledgmentThis paper is an independent study that is not funded by any institution. We would like to thank all those who have provided immaterial support for the implementation of this study.

Debt used in capital excessive composition for Telecommunication Company's business development has decreased profitability company's. In Islamic perspective, debt concept is represented in a loan form, with not additional elements that will lead to ribawi practice. This study purpose is to determine effect of debt policy in an Islamic perspective and capital structure that has implications on profitability telecommunications service companies in Indonesia. The method used is descriptive and verification methods with a quantitative approach, the sample used in this research is 4 telecommunication service companies listed on Indonesia Stock Exchange and last 5 years annual financial reports, so that data amount in this study is 20 data and analysis tools used are Multiple Linear Regression, Correlation Coefficient, Coefficient of Determination, and T-Test. This study results indicate that Debt Policy in Islamic Perspective has a moderate effect and has a positive correlation on profitability, while capital structure has a moderate effect and has a negative correlation on profitability telecommunication service companies in Indonesia.

The payment choice of mergers and acquisitions (M&As) influences firm performance and facilitates wealth transfer to shareholders and realises synergy through stakeholders' implicit contract. This study examines the choice of payment methods and firm-level characteristics of UK M&As during the financial crisis referring to the business-to-business (B2B) market in a broader sense. Further, conceptualising social innovation as a process-outcome-value construct, this study evaluates the choice of payment methods and firm-level characteristics of M&As through the lens of corporate social responsibility (CSR). The findings suggest that a stock payment method is favoured well over a cash payment method by the acquirers of M&A firms and firms that are pursuing social innovation through CSR activities. The results further document that a volatile market affected by the financial crisis reacts to the financing choice of M&As, making a sizable impact on firms' capital structure, ownership concentration, and asymmetric information. Acquiring firms that opt for stock payment methods register a significant increase in their firm-level characteristics, such as market-to-book-value, deal value, growth, and CARs compared to the cash payment method deals.

I examine how the investment behavior of bond mutual funds affects corporate financing decisions. Mutual funds that hold a firm’s existing bonds have a high propensity to acquire additional new issuances from the same firm. I utilize this stylized fact to construct a firm-specific bond capital supply measure by aggregating flows from a firm’s existing bondholders. Firms with a higher flow-driven capital supply are more likely to issue bonds, enjoy lower yields, and substitute away from equity financing and bank loans. Information acquisition costs and underwriter relationship likely contribute to the impact of flow-driven capital supply.

The purpose of this study was to see and test whether the effect of capital structure, asset structure, net income, accounts receivable, liquidity, profitability variable to cash flows variable on the value of service companies listed on the IDX (Indonesia Stock Exchange) from 2017-2019. This research uses a method with a quantitative descriptive approach. The population obtained was 78 companies listed on the Indonesia Stock Exchange from 2017-2019. The sample used in this study was purposive sampling technique. The sample obtained was 12 companies. The data analysis used several analyzes, namely multiple linear analysis, the coefficient of determination test, the classical assumption test, the F test, and the t-test. This study shows that partially the variables of capital structure, asset structure, accounts receivable, liquidity, ROE has no effect on cash flow variables at service companies that listed on the Indonesia Stock Exchange, while the net income variable has an influence on cash flow variables at service companies listed in Indonesia Stock Exchange, and simultaneously the variables of capital structure, asset structure, net income, accounts receivable, liquidity, Return On Equity do not have an influence on cash flow variables in service companies that listed on the Indonesia Stock Exchange.

Since the change of regime, significant changes have taken place in the Hungarian agricultural sector. These changes affected the ownership structure, market conditions and, last but not least, the capital structure of agricultural enterprises and their income situation. Accession to the European Union has also had a significant impact on the income situation of agricultural enterprises. In our study, we examine the profitability situation of the corporate agricultural enterprises of 3 Hungarian statistical regions in relation to the period between 2012 and 2018, we try to reveal the differences by region and their possible reasons. Our research also covers the development of the efficiency of the examined business circle, and we also dealt with the determination of the degree of market concentration. We found that the level of market concentration was low in the sample examined, while profitability and efficiency deteriorated, albeit to a differentiated extent by region.

This study aims to determine the effect of capital structure (X1), profitability (X2) simultaneously and partially on firm value in plantation sub-sector companies that go public on the Indonesia Stock Exchange. This study uses a quantitative approach. Determining the sample of companies using purposive sampling technique by considering companies that are listed and no listed on the Indonesia Stock Exchange and have financial statements from 2015-2019, so the total sample is 7 companies in the plantation sub-sector. Sources data of research are from audited company annual reports and from the Indonesia Stock Exchange (www.idx.co.id) and ICMD (Indonesia Capital Market Directory). The result of the study shows that the capital structure and profitability simultaneously have a significant effect on firm value. Capital structure partially has no significant effect on firm value in plantation sub-sector companies listed on the Indonesia Stock Exchange.

This study aims to analyze the effect of financial flexibility, managerial ownership, and firm size on firm value with capital structure as an intervening variable for infrastructure, utility, and transportation companies. This research was a quantitative study. The data used were secondary data in the form financial statements of infrastructure, utility and transportation companies listed in the Indonesia Stock Exchange during the period 2015-2019. The sample used was a purposive sampling technique consisting of 30 companies infrastructure, utility and transportation. The data were analyzed using path analysis supported by SmartPLS 3.3 software. The results show that financial flexibility has no significant negative effect on the capital structure; managerial ownership has a significant negative effect on the capital structure; firm size has a significant positive effect on the capital structure; financial flexibility has a significant negative effect on firm value; managerial ownership has no significant positive effect on firm value; firm size has no significant positive effect on firm value; capital structure has a significant positive effect on firm value; financial flexibility had no significant effect on firm value through capital structure; managerial ownership has a significant effect on firm value through capital structure; firm size has a significant effect on firm value through capital structure.

The aim of this study was to find out the effect of liquidity, business risk, and asset structure to capital structure in consumer goods industry manufacturing companies listed on the Bursa Efek Indonesia for the period 2015-2019. The ratio used to measure the liquidity variable is the current ratio, the business risk variable is measured by BRISK, and the asset structure variable is measured by the fixed asset ratio. The sampling technique used was purposive sampling method. This research was conducted with 19 samples of companies in the consumer goods industry sector. The results show that the liquidity variable has a significant effect on the capital structure of manufacturing companies in the consumer goods industry sector listed on the BEI for the period 2015-2019, meanwhile, the business risk and asset structure variables have no significant effect on the capital structure of manufacturing companies in the consumer goods industry listed on the BEI for the period 2015-2019

The paper carries out the content analysis of scientific publications devoted to the management of financial structure of corporate capital on the basis of research, the results of which were published both in domestic scientific journals and in Scopus scientometric database. For the study, not only analytical calculations obtained from Scopus were used, but also bibliometric maps built on the basis of the formed sample using VOSviewer 1.6.16 and Google Books Ngram Viewer. The results of the study showed that the financial policy of an enterprise should be considered as the goal of financial management determined by the owners and agreed with the management, which provides for the development of an algorithm of actions aimed at forming an optimal capital structure, the choice of forms and methods for achieving it both in the short and long term. At the same time, a high-quality financial policy should comply with the following key principles: fairness, compliance with current legislation, feasibility, accessibility, and risk level, which corresponds to the level of the corresponding risk of both the owners and the management of a company.

Last two decades, corporate accounting scandals have represented a serious challenge to economic sustainability. To protect the shareholders right against abusive managerial conduct, the concepts of corporate governance structures and provisions have widely attracted the attention of practitioners and researchers. The main purpose of this paper is to examine the linkage between corporate governance and the performance of non-financial firms listed on Muscat Securities Market over the period 2007-2017. Additionally, whether financial leverage acts as a mediating factor is investigated. A panel fixed effect regression is conducted to test if there is a relationship between corporate governance, capital structure and firm performance. Overall results show that women on board, audit committee size, leverage and firm size are positively related to firm performance. The study presents a strong understanding to senior management to be focused more on corporate governance codes and regulations, as well as to both internal and external auditors to strictly monitor the application of corporate governance regulations.

The phenomenon that there are still many manufacturing industry companies on the Indonesia Stock Exchange that have a PBV smaller than one is the main basis for conducting the study. This study aims to analyze the effect of financial policy and financial performance on firm value. The sampling technique was based on purposive sampling. The data analysis technique used a linear regression model. Based on the analysis and discussion results, there are four main findings obtained from this study: First, the model used is significant to explain changes in firm value with the ability to explain 48.7 percent. Second, of the five independent variables, there are three variables: the policy in working capital management and the performance variable, namely the volatility of expectations and returns, which have a significant effect. To the value of the company. Third, the company's financial performance factors have a more dominant influence on the company's value dynamics than policy factors. Fourth, the direction coefficient of the influence of the independent variable on the dependent variable, although the two variables are not significant. The practical implication is to increase the value of a manufacturing company. Therefore, it is advisable to consider financial policies and financial performance. Theoretically, financial management based on signal theory and trade-off theory of Islamic perspective theory can increase firm value.

This research was conducted to examine whether agency cost can be influenced by the board of commissioners, audit committee, company size, and capital structure. This seeks to contribute to the literature of factors influencing agency cost in Indonesia. Agency cost exists because of some assymetircal information and conflicts between principal and agent. The study used descriptive method of which purposive sampling method was used in sample selection. The samples were selected from the top 100 largest wealth-creators companies in 2019 in Indonesia. Using the wealth-creators companies as the samples makes this research a unique one. The classical assumption test was conducted to check the relationship between variables. Data gathered were analyzed and interpreted using multiple regression analysisof which t-test and F-test were considered. The study revealed that agency cost was simultaneously influenced by the board of commissioners, audit committee, company size, and capital structure. Partially, this study found that board of commissioners and company size have siginificant influence on agency cost, while audit committee and capital structure have no influence on agency cost. The findings indicate that there are several factors that influences agency cost. Thus, agency cost can be minimized by proper monitoring by the presence of board of commissioner; while company size and capital structure trigger agency costs.

Company value is considered necessary for interested parties both internally and externally when making investments. This study examines and analyzes the influence of Company Characteristics (Firm Size, Capital Structure, and Profitability) and Corporate Social Responsibility (CSR) Disclosure moderated by Good Corporate Governance on Firm Value. There are 188 manufacturing companies on the Indonesia Stock Exchange (IDX), the population with 22 sample companies in the 2016-2018 period. The sampling technique was the purposive sampling method. Data were analyzed using multiple linear regression and moderated regression analysis on SPSS. This study indicates that the capital structure and good governance affect firm value, and the firm size variable shows a negative effect. Good Corporate Governance can strengthen the influence of firm size, capital structure, and CSR disclosure on firm value, while good governance weakens the effect of profitability on firm value, which is of interest.

Business competition today makes many companies strive to achieve their main goals. Maximizing company value is one of the main goals of every company. Maximizing company value by fulfilling company funds that come from internal and external sources of the company. Determination of the proportion of long-term debt and capital in its use as a source of a company has a company that is closely related to the capital structure. This study aims to see the effect of profitability, business risk, asset growth, operating leverage on the capital structure of manufacturing companies listed on the Indonesia Stock Exchange for the 2015-2019 period. This type of research is quantitative. The population used in this study are manufacturing companies listed on the Indonesia Stock Exchange (IDX) with a sample size of 170 samples using purposive sampling method. The analysis was performed using multiple regression models. The results of this study indicate that: (1) Profitability has a negative and significant effect on capital structure (2). Business risk has a negative and insignificant effect on capital structure (3) Asset growth has a positive and insignificant effect on capital structure (4) Operating leverage has a negative and insignificant effect on capital structure

Purpose This study aims to analyse 508 financially distressed firm-year observations for the period 2010–2018 of Pakistan Stock Exchange (PSX) listed firms to examine the magnitude of indirect financial distress costs (IFDC) and to investigate which firm-specific variable is relatively important in explaining these indirect costs. This will not only enrich empirical literature but also helpful in cross-country comparison. Design/methodology/approach Optimal model selection along with panel data analysis technique is used to select the most optimal model to observe the findings. Financial distress is measure through Altman’s Z-score and firm-specific variables cover leverage, level of intangible assets, investment policy, tangible assets, firm’s size, level of liquid assets and Tobin’s Q of sample firms. Findings The findings of this study show that the average size of IFDC for the sample observations is 6.70%. In addition to this, finding further suggest that leverage, the level of intangible assets and changes in investment policy have positive while the size of the firm and Tobin’s Q have a significant negative impact on IFDC. Further, this paper argues that the level of tangible assets and liquid assets are statistically unimportant in observing the IFDC for PSX financially distressed firm-year observations. Practical implications The findings of this study provide more insight to corporate managers and investors about the association between firm-specific financial characteristics and IFDC concerning Pakistani firms. Furthermore, this study contributes to the existing literature by adding new evidence from developing countries such as Pakistan which are helpful for regulatory bodies and policymakers in the formulation of long-term strategies to manage the financial distress costs. Originality/value The study extends the body of existing literature on IFDC regarding Pakistan. The results suggest that policymakers may pay special attention to the quality of a firm’s capital structure strategies while predicting corporate financial distress costs.

The research aims to analyze the influence of the investment opportunity set, profitability and operating leverage on the capital structureof food and beverage companies listed on the Indonesian Stock Exchange for the 2014-2018 period. Determination of samples using purposive sampling with criteria namely food and beverage companies listed on the Indonesian Stock Exchange and those who publish financial statements in a row during the 2014-2018 period, obtained 10 companies that meet the criteria and 5 years of observation to produce 50 samples. The results of the study indicate that the investment opportunity set variable in a negative and not significant effect on capital structure with a significance value of 0,129> 0,05, profitability in a positive and significant effect on capital structure with a significane value of 0,031< 0,05 and operating laverage in a prsial positive and significant effect on capital structure with a significance value of 0,030< 0,05. Investment opportunity set, profitability and operating laverage simultaneously influence the capital structure with a significance value of 0,049 > 0,05. Investment opportunity set, profitability and operating laverage are able to explain the capital structure of 10,5% is expalined by other factors not included in this study.

The purpose of this paper is to examine the determinants of financial performance, firm liquidity and financial leverage of Indian listed firms. This study uses both static models (pooled, fixed, and random effects) and Generalized Moment Methods (GMM). Financial leverage (FINLE) is defined by the ratio of total liabilities to total assets, whereas the current ratio and the quick ratio are used as firm liquidity factors. Further, a set of financial performance determinants such as return on assets, profit after tax, return on capital employed, return on equity, and Tobin-Q are used as independent factors. The results indicated that profit after tax, return on equity, return on capital employed, and Tobin-Q are the most significant financial success variables that influence financial leverage of Indian listed companies. Furthermore, profit after tax, return on capital invested, return on equity, and Tobin-Q are considered to have a substantial effect on financial leverage among the financial success indicators. In the case of firm liquidity, the findings show that the current ratio and the quick ratio have a substantial effect on the financial leverage of Indian listed companies.

The existence of research aims to find out how the company's value occurred in the basic industry and chemical subsector pulp & paper in 2014-2018. In increasing the value of the company, a manager is very influential on decisions taken including investment decisions, dividend policies and funding decisions, every decision taken affects financial decisions. Some factors that affect the value of the company are capital structure, dividend policy, company growth, liquidity, company size and investment decisions. Type of research is quantitative using financial data listed on financial statements listed on the IDX (Indonesia Stock Exchange). Investment decisions are the allocation of capital into investment proposals should be evaluated and linked to the risks and results expected to obtain a high level of return with a certain level of risk. Dividend policy is a decision on whether the profit earned will be divided as dividends or will be withheld as an upcoming investment. The Company may be distributed to shareholders as dividends or withheld in the form of retained earnings to finance the company's investments. The capital structure is the balance of the amount of short-term debt that is permanent, long-term debt, preferred shares and common shares, capital structure decisions. Profitability is revenue minus expenses and losses during the reporting period. Analysis of profitability is critical for creditors and equity investors.

Coal mining companies is built to serve and maintain the stability of domestic coal supply, especially at PLTU so that large economics of scale can be achieved, in order for this to happen, it is necessary to have good corporate governance in order to create economic value added for the growth and development of the company. This study aims to determine how much capital structure could moderated relationship between good corporate governance and economic value added of the coal companies. The research method used is a quantitative descriptive. This study samples are coal mining company listed at indonesian exchange stock between 2015 and 2019. Moderated regression analysis was used in this study to analyze the data. The result showed that with capital structure as moderate variable, board size committee audit that has a positive significant effect on economic value added and managerial ownership has a negative significant effect. While, size board of director hasn’t significant effect Keywords: capital structure, financial performance, good corporate governance.

Islamic microfinance institutions play a major role in the provision of financial services to the poor and underprivileged through non-interest, equity-based products and services. To achieve these critical objectives, however, they need to be financially sustainable, which is threatened by the current economic and financial crisis caused by the Covid-19 pandemic. The objective of this paper is to review the determinants of financial sustainability of microfinance institutions with a view to drawing lessons for Islamic microfinance banks in Nigeria. The paper utilized the literature review methodology to synthesize research findings in the area. The review revealed that the major determinants of financial sustainability of microfinance institutions are the capital structure, asset size, and financial innovation. Others are good risk management and corporate governance frameworks. The paper thus recommended that Islamic microfinance institutions in Nigeria should maintain a robust capital structure that relies more on equity, a lean but diversified Board, and utilize more technology-based services. Most importantly, they should emphasize profit and loss sharing principles in their operations.

In this study, I review the empirical literature on the real effects of corporate taxation. I define real effects broadly as firms' investment responses, corporate risk taking, capital structure ch...

The aviation industry is undergoing a series of layered dynamic effects to the entire business model value chain including aviation finance, leasing, and its associated structured products. COVID has caused a historical exogenous demand shock and global airlines have suffered greatly; recovery is varied and uneven. There is a divergence of what has occurred since COVID and outlook geographically between the airlines (end-users), their lessors, and all of the various stakeholders in financing structures such as aircraft asset backed securities (ABS) and enhanced equipment trust certificates (EETCs) that make up the capital structure. Debt funding has been robust for airlines with access to the capital markets, but others are finding it more difficult and are less fortunate. Financing options are diverse but are restricted between the players, given the effects of COVID. Pricing and structuring characteristics are all affected by these updated conditions. TOPICS:Fixed income and structured finance, asset-backed securities (ABS), credit risk management, financial crises and financial market history Key Findings ▪ COVID has changed the structure of demand for aircraft, and it has impacted both financing of aircraft lessors and the airlines with different effects geographically. ▪ Airlines face a bifurcation of opportunity, between larger or state-supported airlines with access to the public debt capital markets or government subsidy and smaller airlines, which have had to fall back on private capital in a challenging environment. ▪ Aircraft ABS and EETC financing environment continue to have pressures from downward aircraft pricing and 2 EETC issuance windowns cases.

Purpose: The aim of this research is to find out the impact of financial leverage on firm profitability of the listed non-financial firms in Sri Lanka. Design/Methodology/Approach: Total of 290 companies listed on Colombo Stock Exchange (CSE) is considered as the population and the sampling process excluded Banking, Finance, and Insurance companies as they have identical financial characteristics. The study analyzed 82 non-financial firms listed in CSE from year 2013 to 2017. Debt to equity ratio and liquidity were considered as independent variable. Further, sales growth and firm size were considered as control variables. Return on assets of the firm measures the profitability of the firms and incorporated as dependent variable. The study used panel regression analysis, descriptive tests, and correlation analysis. Findings: Fixed effect model reveals that there is a negative significant impact of financial leverage on return on assets of the non-financial firms listed in CSE. The study elaborates a high influence on return on assets due to the independent variables considered in the study since the R2 value becomes 85.43%. Originality: The review of the literature reveals that there are limited number of studies have been carried out incorporating all the non-financial firms in recent past considering the time period of 2013 - 2017. Therefore, this study would provide more insights including the firms’ performance during these periods. Further, it was identified that there are contradictions in the previous findings. Therefore, the study provides more insights to examine the performance of non-financial firms due to the incorporation of debt capital during the period of 2013 – 2017. Theoretical and Policy implications: M&M 1963, agency cost theories are providing the arguments over the mix of debt-to-equity proportion in the organizational capital structure. This study considers the non-financial firm’s performance according to its capital structure. This can be justified that the operational structure of financial and non-financial firms is significantly different. Therefore, the capital structure incorporation would provide significantly different impacts in between financial and non-financial firms. Therefore, the study adds more value by analyzing only the performance of nonfinancial firms based on its financial leverage. Research limitations/ Future research directions: The study uses only the secondary data and the five-year period from 2013 – 2017. Future studies can be done increasing the sample size and employing different methods such as case studies, that would provide more insights to the findings of this study.

PurposeThe authors investigate the impact of governance on the leverage of East Asian firms in the financial crisis context, in order to understand the puzzle whether debt acts as a substitute for governance or an outcome of the governance mechanism.Design/methodology/approachThe authors use 86,030 firm-years and the country-level governance data from eight East Asian countries over the period 1996–2017. The authors employ the fixed effects (FE) model, in the main analysis and the weighted least squares model, as a robustness check in order to compare the two competing hypotheses of agency theory, substitute and outcome models.FindingsThe authors’ results show that debt acts as a substitute for governance before the GFC, but during and after the GFC the picture changes. Namely, debt acts as an outcome of the governance mechanism during the GFC and its aftermath. Since during financial downturns both agency costs increase, and information asymmetry widens, firms in poor-governed countries may be reluctant to increase their leverage in order not to face financial distress and additional restrictions. Thus, the results imply that the use of debt as a tool to mitigate agency conflicts and a substitute for governance strongly depends on the environment that the firms operate and the general macroeconomic conditions, such as facing a financial crisis or not.Research limitations/implicationsThis study provides an interesting case of the firms' capacity to raise money during a crisis and that governance plays an important role in borrowing activities of firms. This will undoubtedly help motivating owners and policymakers for improving governance. The authors’ findings may be useful for policymakers to develop policies considering the adverse effects caused by exogenous shocks. This is crucial because the severity of GFC as a shock seems to change the macro and institutional environment that firms operate. While the authors properly address the research hypotheses using country governance data, future research may employ corporate governance data to attain firm-level results by testing two competing hypotheses.Originality/valueThere are several important areas where this study makes original contributions. First, while Tsoy and Heshmati (2019) focus on the dynamics of capital structure for only Korean firms, the authors extend the sample including eight East Asian countries considering the impact of country governance on capital structure policy. Specifically, this study is the first in using the robust country governance data, which differs by country and year, in the crisis context. Next, the authors investigate both the AFC and GFC to compare whether these two crises have different effects on capital structure policy of East Asian firms. Finally, the authors aim to understand whether leverage is used as a substitute for governance or an outcome of governance mechanism considering recessions.

The main objective of any firm is to maximize shareholder's wealth, which can be seen from firm value. This study aims to analyze and explain the effect of profitability, company size, capital structure, and liquidity risk on firm value banking companies in Indonesia. The population of this study is all banking companies listed on the Indonesia Stock Exchange, with an observation period of 2017-2018. The sample selection using a purposive sampling method. Data have both cross-section and time variation. Analysis and hypothesis testing were carried out by using a linear regression analysis using Eviews 11. The results showed that investors viewed that the company's overall profits from its business activities could increase its share price. The capital structure owned by the public relatively small, which meant that the company could provide a source of funds from within the company in the form of the owner's capital or retained earnings. Funds obtained from loans, if they were not followed by the ability to manage funds or were not channeled back to the community, would cause interest expenses and destroy profits. This condition results in investors selling their shares. Investors in making investment decisions paid attention to one indicator at a time and paid attention to all the factors that determined the company's value.

This article develops a quantitative open economy framework with dynamics, firm heterogeneity and financial frictions to study the impact of corporate tax reforms targeted at multinationals. The model quantifies their impact on firm selection, production and welfare. Firms draw idiosyncratic shocks, invest in capital, choose optimal financing and select endogenously into selling abroad, through exporting or FDI. I apply this framework to the removal of the U.S. repatriation tax as in the Tax Cuts and Jobs Act. The reform’s impact trades-off two selection effects—more offshoring versus greater U.S. business dynamism. The reform leads to higher U.S. welfare at little cost to the Treasury. A series of exercises illustrate that the novel features of this framework have significant quantitative implications. The reform gives starkly different cross-sectional predictions and lower welfare gains when financial frictions are removed and it is welfare reducing in a static counterpart of the model.

Commercial banks that control a large proportion of overall assets of the financial sector primarily rely on extending credits, and banks may raise their earnings through this function which constitutes one of the major functions of commercial banks. Consequently, and due to the wide multiple risk exposures of commercial banks, the issue of capital structure has become a vital element in determining the viability of banks and their ability to withstand various risks involved. Hence, risk management as such has become an essential part of evaluating various risks, including credit risks, liquidity risks, solvency risks and so forth. It is necessary to remember that banks differ from one to another in many respects, namely, their goals, services and strategies. Thus, banks are facing various risks in their day-to-day operations. The research here has implemented a quantitative methodology throughout distributing a survey over a defined number of respondents, and the results were viewed through the prism of regression analysis and Pearson correlations. The obtained results prove there is a direct relationship between market risk, liquidity risk, credit risk, and solvency risk. The results also prove that the higher the risk management ratios are managed, the higher the net income will be.

This study intends to conduct a non-systematic literature review on empirical and theoretical studies of capital structure policies in relation to firm value, as well as reviewing its nature and dimensions. Until now, no consensus has emerged, and the results cannot be concluded. This study also tries to include empirical of capital structure policies and firm value from various countries, which show that the phenomenon of capital structure policies and firm value differs from one country to another. Various discussions on capital structure policies and firm value have resulted in a literature review and its development over time. Another development is the link between capital structure and size. Size can determine the company's capital structure related to access to sources of financing. Generally, large companies are easier to obtain external financing sources than small companies. Keywords: Capital Structure, Size, Firm value

We estimate real losses arising from the cross‐sectional misallocation of financial liabilities. Extending a production‐based framework of misallocation measurement to the liabilities side of the balance sheet and using manufacturing firm data from the United States and China, we find significant misallocation of debt and equity in China but not the United States. Reallocating liabilities of firms in China to mimic U.S. efficiency would produce gains of 51% to 69% in real value‐added, with only 17% to 21% stemming from inefficient debt‐equity combinations. For Chinese firms that are large or in developed cities, we estimate lower distortionary financing costs.

Pajak merupakan sumber pendapatan terbesar bagi negara namun pajak terutang dapat membebani dan mengrangi laba persaaan. Tax saving merupakan upaya perusahaan untuk menghemat pajak terutang namun juga memperhatikan sudut pandang stakeholder atas kinerja manajer dalam mengelola perusahaan. Penelitian ini bertujuan untuk menguji faktor detrminan berupa: struktur modal, sales growth, penyusutan, dan keahlian keuangan komite audit yang mempengaruhi tax saving. Populasi penelitian ini adalah perusahaan pada klasifikasi industri consumer goods yang terdaftar di Bursa Efek Indonesia tahun 2017-2019. Penentuan sampel menggunakan purposive sampling dan terdapat 69 data amatan perusahaan yang memenuhi kriteria. Penelitian ini menggunakan data sekunder dan hipotesis diuji dengan analisis regresi linier berganda. Hasil pengujian hipotesis menunjukkan bahwa sales growth dan penyusutan berpengaruh terhadap tax saving. Sedangkan struktur modal dan keahlian keuangan komite audit tidak berpengaruh terhadap tax saving.

Property issuers must be prepared to face another year of sluggish market where after three years there has been a continuous cycle of weakness. The purpose of this research is to see the influence. Capital Structure, Liquidity, Company Size, Debt Policy and Profitability against Company Value in property companies, re-evaluation and construction of buildings listed on the Indonesia Stock Exchange for the 2016-2019 Period. Quantitative research approach. This type of descriptive quantitative research. The nature of this research is due and effect / causal. The population in this study were 83 types of property, real estate, and building construction companies listed on the Indonesia Stock Exchange for the 2016-2019 Period. The sample is 23 companies. The result is that the capital structure has no partial effect on company value in companies, real estate and building construction listed on the Indonesia Stock Exchange for the 2016-2019 Period. Liquidity does not partially affect the value of property, real estate and building construction companies listed on the Indonesia Stock Exchange for the 2016-2019 period. The size of the company does not have a partial effect on the value of the company in property, real estate and building construction listed on the Indonesia Stock Exchange for the 2016-2019 period. The debt policy does not have a partial effect on company value in property, real estate and building construction listed on the Indonesia Stock Exchange for the 2016-2019 period. Profitability has a partial effect on company value in property, real estate, and building construction listed on the Indonesia Stock Exchange for the 2016-2019 period. Capital structure, liquidity, company size, debt and profitability simultaneously influence the value of the company in property, real estate and building construction listed on the Indonesia Stock Exchange for the 2016-2019 period.

This study provides a detailed analysis of the impact of financial sanctions on publicly traded companies. We consider the effect of imposing and lifting sanctions on the target country’s traded equities and examine the differences in the reaction of politically connected firms and those without such connections. The paper focuses on Iran due to (1) its sizable financial markets, (2) imposition of sanctions of varying severity and duration on private and state-owned companies, (3) the significant presence of politically connected firms in the stock market, and (4) the unique event of the 2015 nuclear deal, resulting in fairly rapid lifting of a sizable portion of imposed sanctions. We find that sanctions affect politically connected firms more than ordinary firms, have lasting negative effects on profitability ratios, and that politically connected firms stock prices bounce back more slowly after removal of sanctions. Firms targeted by financial sanctions decrease their leverage and increase their cash holding to manage their perceived increase in risk profile.

In corporate finance, the pecking-order theory suggests that companies adhere to a particular financing hierarchy, with internal funding taking preference over external funding, and debt financing taking preference over equity. This paper examines whether South African state-owned entities prioritize their financing sources as predicted by the pecking-order theory. A financing deficit variable comprising various cash flow-based components was used to test the theory. A panel regression model was employed using panel data estimators. Using a cross-section sample of 33 state-owned entities from 1995 to 2018, the study finds no evidence that South African state-owned entities follow a pecking order to finance investment projects. The pecking order theory proposition that costs of adverse selection are dominant for lower levels of leverage provides a reason for the financing deficit coefficient not being close to unity and hence an indication that the SOEs in South Africa do not follow the pecking order behavior in their financing decisions, an indication that South African capital market is still developing.

Subject. The article addresses the capital structure of Russian oil and gas companies and key factors, influencing the equity to debt ratio. Objectives. The paper aims at the comprehensive review of the capital structure of Russia's largest oil and gas companies from 2010 to 2019, revealing the significant factors of its formation and transformation, assesses the impact of sanctions, imposed on Russia, on the equity to debt ratio in the oil and gas industry. Methods. The study rests on the combination of methods of scientific knowledge and financial, economic, and econometric analysis of panel data with fixed and random effects. Results. We unveil patterns of changes in the equity to debt ratio at the level of the oil and gas industry as a whole and with differentiation for individual companies, for 2010–2019. The econometric models that were built and tested based on panel data enabled to establish functional relevance and identify a set of significant factors, which included the company size, profitability of equity, and revenue from international supplies. Conclusions. Based on the findings, in the future, it is advisable to expand the list of possible factors influencing the capital structure, by adding all sorts of risks, conditions and sources of attraction of both the debt capital and equity, and the specifics of company operation. The determination of the optimal debt-to-equity ratio for the largest oil and gas companies in Russia, taking into account individual economic, management, and strategic characteristics, can be a separate component of the study.