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Article
Publication date: 11 October 2019

Aysa Siddika and Razali Haron

This paper aims to examine the impact of capital regulation, ownership structure and the degree of ownership concentration on the risk of commercial banks.

Abstract

Purpose

This paper aims to examine the impact of capital regulation, ownership structure and the degree of ownership concentration on the risk of commercial banks.

Design/methodology/approach

This study uses a sample of 565 commercial banks from 52 countries over the period of 2011-2015. A dynamic panel data model estimation using the maximum likelihood with structural equation modelling (SEM) was followed considering the panel nature of this study.

Findings

The study found that the increase of capital ratio decreases bank risk and the regulatory pressure increases the risk-taking of the bank. No statistically significant relationship between banks’ ownership structure and risk-taking was found. The concentration of ownership was found negatively associated with bank risk. Finally, the study found that in the long term, bank increases the capital level that decreases the default risk.

Originality/value

This study presents an empirical analysis on the global banking system focusing on the Basel Committee member and non-member countries that reflect the implementation of Basel II and Basel III. Therefore, it helps fill the gap in the banking literature on the effect of recent changes in the capital regulation on bank risk. Maximum likelihood with SEM addresses the issue of endogeneity, efficiency and time-invariant variables. Moreover, this study measures the risk by different proxy variables that address total, default and liquidity risks of the banks. Examining from a different perspective of risk makes the study more robust.

Details

Journal of Financial Regulation and Compliance, vol. 28 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 9 February 2015

Mohammad Alipour, Mir Farhad Seddigh Mohammadi and Hojjatollah Derakhshan

– This paper aims to investigate the determinants of capital structure of non-financial firms in Iran.

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Abstract

Purpose

This paper aims to investigate the determinants of capital structure of non-financial firms in Iran.

Design/methodology/approach

This paper reviews different conditional theories of capital structure to formulate testable propositions concerning the determinants of capital structure of Iranian companies. Pooled ordinary least squares and panel econometric techniques such as fixed effects and random effects are used to investigate the most significant factors that affect the capital structure choice of manufacturing firms listed on Tehran Stock Exchange Iran during 2003-2007.

Findings

The results of the study suggest that variables such as firm’s size, financial flexibility, asset structure, profitability, liquidity, growth, risk and state ownership affect all measures of capital structure of Iranian corporations. Short-term debt is found to represent an important financing source for corporations in Iran. The results of the present research are consistent with some capital structure theories.

Research limitations/implications

In general, the results provide evidence that the five theories discussed influence emerging markets. Due to the existence of a negative relationship between profitability and capital structure, investors must consider capital structure before making investment decisions.

Practical implications

This study has laid some groundwork to explore the determinants of capital structure of Iranian firms upon which a more detailed evaluation could be based. Furthermore, the empirical findings will help corporate managers in making optimal capital structure decisions.

Originality/value

To the authors’ knowledge, this is the first study that explores the determinants of capital structure of manufacturing firms in Iran by using the most recent data. Moreover, this paper provides a theoretical model to explain the mechanism of how the ownership structure impacts debt financing.

Details

International Journal of Law and Management, vol. 57 no. 1
Type: Research Article
ISSN: 1754-243X

Keywords

Book part
Publication date: 20 May 2019

Nadeem Ahmed Sheikh

The purpose of this study is twofold. First, to investigate whether internal attributes of corporate governance such as board size, board composition, CEO duality, board meetings…

Abstract

The purpose of this study is twofold. First, to investigate whether internal attributes of corporate governance such as board size, board composition, CEO duality, board meetings, blockholders' ownership, managerial ownership, CEO remuneration, and directors' remuneration affect the capital structure (i.e., total debt ratio, long-term debt ratio, and short-term debt ratio) choice of non-financial firms listed on Pakistan Stock Exchange Limited during 2009–2014. Second, whether theories relevant to corporate governance developed in western settings provide support to understand the financing behavior of firms in a developing country, Pakistan. In sum, results indicate that corporate governance measures have some role in shaping the financing behavior of firms. It is worth mention that each company is bound to explicitly confirm in annual report regarding compliance with code of corporate governance, but results indicate a different story. For instance, descriptive statistics indicate that five individual larger shareholders on average hold more than 68% shares.

Details

Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice
Type: Book
ISBN: 978-1-78973-007-4

Keywords

Book part
Publication date: 8 May 2018

Janet Boguslaw and Sarah Taghvai-Soroui

This chapter and case study examine how and which structured elements of an employee-owned business contribute to building the economic security and asset wealth of the…

Abstract

This chapter and case study examine how and which structured elements of an employee-owned business contribute to building the economic security and asset wealth of the lowest-wage and skilled employees of the firm. It paves the way for greater understanding about how intentionally structured workplaces can address wealth inequality and economic security through income and non-income opportunity systems.

The study draws upon qualitative interviews with four members of management, two plant managers, and 12 low-income employee-owners. Company documents and confidential employee data were provided for direct research analysis. Interviews took place at company locations, and covered employees from all shifts.

Employee ownership structures provide an important tool for advancing policy support and management practices to rebuild the wealth building benefits of work for low-income workers.

To ensure confidentiality, the study is anonymized and does not directly draw on the worker-owner interviews. This limits the opportunity to demonstrate the effect of structure on workforce; nonetheless, the empirical data tell an important story.

Expanding wealth inequality and economic precarity among low- and moderate-income workers has raised broad debates about how shifts in the structure of work, through new business, capital, and ownership structures, may be contributing to these social problems.

The employee benefits of employee ownership are not fully studied. This case contributes to understanding how employee ownership may reduce gender and racial wealth gaps, build family well-being, and become a model for structuring opportunity for those traditionally left out of the economic mainstream.

Details

Employee Ownership and Employee Involvement at Work: Case Studies
Type: Book
ISBN: 978-1-78714-520-7

Keywords

Article
Publication date: 11 July 2016

Hyungkee Young Baek, David D. Cho and Philip L Fazio

The purpose of this paper is to explain how family firm ownership and management control affect corporate capital structure strategy after controlling for other significant…

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Abstract

Purpose

The purpose of this paper is to explain how family firm ownership and management control affect corporate capital structure strategy after controlling for other significant variables. The authors argue that, although family ownership has a positive effect on a firm’s leverage, family control through the CEO position and equity performance moderate its impact.

Design/methodology/approach

Using a stratified random sample of 200 US public firms in the S & P Small-Cap 600 index from 1999 to 2007, this study uses random effect panel regressions to test the impact of family ownership on market value and book value debt ratios and the moderating effects of family control and equity performance after controlling for firm, industry, and macroeconomic variables.

Findings

The initial panel regression suggests that family ownership is not related to debt ratios. However, further examination with controls for family CEO and equity performance shows that family ownership is positively related to market and book value debt ratios, but its effect is offset by family control through the CEO position and equity performance.

Research limitations/implications

This study’s methodology can be extended to examine how family firm governance factors affect other firm behaviors such as investment, risk management, and CEO compensation.

Practical implications

Practitioners should consider family ownership and management control factors when establishing financing strategy. The Small Business Administration and other government agencies should make similar considerations when setting policies.

Originality/value

This paper separates ownership and management control factors to explain why family firms use more or less leverage. This study, thus, reconciles the mixed results of prior studies, which do not differentiate between these two governance factors.

Details

Journal of Family Business Management, vol. 6 no. 2
Type: Research Article
ISSN: 2043-6238

Keywords

Open Access
Article
Publication date: 3 August 2022

Dermeval Martins Borges Júnior

This study aims to examine the relationship between corporate governance mechanisms and the capital structure of Latin American firms.

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Abstract

Purpose

This study aims to examine the relationship between corporate governance mechanisms and the capital structure of Latin American firms.

Design/methodology/approach

The sample included companies from Argentina, Brazil, Chile, Colombia, Mexico and Peru. The authors collected data from 201 non-financial companies between 2009 and 2018, totalizing 1,716 firm-year observations. The data were analyzed using descriptive statistics and linear regression models with panel data.

Findings

The main results indicated that chief executive officer duality, legal protection system and corporate social responsibility voluntary disclosure impact the firm's total debt ratio, corresponding to a positive effect for the first two variables and a negative for the last.

Originality/value

This study advances in two main ways. Firstly, due to the broad approach in which the authors addressed corporate governance, involving board composition, ownership structure, minority shareholders legal protection system and information disclosure. Secondly, by presenting empirical evidence about the effects of corporate governance on capital structure from an extensive sample of Latin American firms, the authors expect to contribute to the international debate on the capital structure due to the unique characteristics of Latin America in this regard.

Details

Journal of Capital Markets Studies, vol. 6 no. 2
Type: Research Article
ISSN: 2514-4774

Keywords

Article
Publication date: 5 October 2015

Enver Halili, Ali Salman Saleh and Rami Zeitun

The purpose of this study is to conduct a comparative analysis of the long-term operating performance of family and non-family firms from the agency theoretic perspective. The…

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Abstract

Purpose

The purpose of this study is to conduct a comparative analysis of the long-term operating performance of family and non-family firms from the agency theoretic perspective. The analysis is focused on investigating the impact of family ownership on principal–agent conflicts of interest.

Design/methodology/approach

This paper examines the relationship between firm operating performance and family ownership for a large sample of 677 Australian-listed companies. The paper uses the Generalised Method of Moments (GMM) estimator model developed by Arellano and Bond (1991) and used by other studies in finance (Baltagi, 2012; Bond, 2002; Mohamed et al., 2008).

Findings

The empirical results show that firms with ownership concentration has a better operating performance due to the alignment of owner-management interests. This study also finds that family-listed companies have higher survival rates and perform better than non-family companies. Findings support the hypothesis that agency costs arise as a result of privileged access of information and self-interest behaviour of managers (outsiders) in firms with dispersed ownership structures.

Originality/value

Earlier studies have only focused on short-term perspectives, particularly investigating small and medium types of Australian family businesses from narrow aspects, such as productivity, business behaviour, capital structure and leverage. Therefore, this paper has conducted a comparative examination of family and non-family firms listed on the Australian Stock Exchange (ASX) to identify the impact of agency costs on their financial performance.

Details

Studies in Economics and Finance, vol. 32 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 18 November 2013

Kun Su, Rui Wan and Bin Li

The purpose of this paper is to illustrate and examine the effects of ultimate ownership, institutionality and their interactions on capital structure in a unified framework…

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Abstract

Purpose

The purpose of this paper is to illustrate and examine the effects of ultimate ownership, institutionality and their interactions on capital structure in a unified framework, based on evidence from China.

Design/methodology/approach

Using six years of panel data of Chinese non-financial listed firms between 2004 and 2009, this paper estimates with correlation analysis and multiple regression analysis.

Findings

This paper finds that debt financing facilitates the ultimate owner's expropriation behavior. The separation of control rights and cash flow rights is positively related to capital structure, while cash flow rights negatively affect it. Compared with private ultimate owners, state ultimate owners have less incentive to reap the benefits of expropriation, implying that the separation of control rights and cash flow rights has a smaller effect on the capital structure of state-owned firms. The improvement of institutionality can restrain ultimate owners' expropriation behavior, and regional institutional development is negatively related to capital structure. The separation of control rights and cash flow rights has a smaller positive effect on capital structure in regions with better-developed institutionality.

Originality/value

This paper incorporates ultimate ownership and institutionality into a unified analytical framework of capital structure. It not only enriches related studies on capital structure, but also helps us understand the institutional roots of irrational capital structure behaviors in China. This paper also provides further evidence on ultimate owners' expropriation of minority shareholders through debt financing.

Details

Chinese Management Studies, vol. 7 no. 4
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 28 March 2022

Imanda Luzari Indomo and Arief Wibisono Lubis

The issue of capital structure among property developers in Indonesia becomes interesting as the government speeds up housing development. Examining which theory prevails…

Abstract

Purpose

The issue of capital structure among property developers in Indonesia becomes interesting as the government speeds up housing development. Examining which theory prevails (trade-off versus pecking order) can be done by looking at several determinants of capital structure. This study aims to argue that examining determinants of capital structure in this context should also incorporate business cycles, as the activities of property developers are cyclical.

Design/methodology/approach

Using a total of 183 observations of listed property developers from 2010 to 2019, this study uses the ordinary least squares regression technique. The focus is on determinants of capital structure, which are profitability, tangibility, firm size, ownership and potential growth. The observations are divided into different business cycles (expansion, peak, trough and decline) based on economic growth rates.

Findings

The results show that the natures of relationships between capital structure (leverage) and its determinants are different during distinct business cycles. For example, profitability has a significant and positive effect on leverage during peak, but the signs are negative during trough and decline. Trade-off theory provides a better explanation of property developers’ capital structure behaviour during peak while pecking order theory is more relevant during trough. It is more difficult to conclude which of these theories is superior in expansion and sideways.

Originality/value

There have been limited studies that focus on corporate finance issues of property developers in Indonesia, and no particular attention has been given to the role of business cycles.

Details

Journal of Financial Management of Property and Construction , vol. 28 no. 1
Type: Research Article
ISSN: 1366-4387

Keywords

Content available
Article
Publication date: 6 March 2023

Trang Khanh Tran and Lan Thi Mai Nguyen

This paper examines the capital structure decisions of family firms in Southeast Asian (ASEAN) countries, considering the moderating effects of various firm-level and

Abstract

Purpose

This paper examines the capital structure decisions of family firms in Southeast Asian (ASEAN) countries, considering the moderating effects of various firm-level and country-level factors.

Design/methodology/approach

The authors apply various panel data models to analyze the data of listed firms in six ASEAN countries over the period of 2007–2017.

Findings

The authors find that family firms tend to use more debt, particularly short-term debt, than non-family firms, which is explained by family owners' concern about the risk of losing control. The authors further document that family firms would use more debt when they have lower ownership concentration, have more family members on the board of directors and are young firms. The authors also find that the impact of family ownership on capital structure is moderated by the level of investors' legal protection of a country.

Originality/value

This study, for the first time, provides comprehensive analyses of the financing decisions of family firms in ASEAN using a unique hand-collected dataset, which highlights that regional culture and market conditions can shape family firms' financing decisions. The authors also manage to mitigate the endogeneity issues that pervade most research on family firms. In addition, this research further explores the heterogeneous impacts of family control on capital structure given different levels of board involvement, firm age, ownership concentration, and most importantly, institutional differences. Such insights provide useful information for prospective investors as well as regulators to make more efficient investment and legislative decisions.

Details

China Finance Review International, vol. 13 no. 2
Type: Research Article
ISSN: 2044-1398

Keywords

21 – 30 of over 39000