The financing decision with regard to capital structure theory of finance has been a topic of many
theories and their conflicting output for past many years. This paper aims to analyse the nature of relationship
between the capital structure of a firm and its performance. The data of 40 firms excluding financial services
firms listed on Nifty indices on National Stock Exchange is studied (The composition of 50 firms on Nifty
represents a well branch out index reflecting precisely the overall market conditions). Financial services firms
have been excluded from purview of this paper, as they are in the business of collecting money and investing in
financial assets rather than producing goods, hence follow a unique business valuation model. Further financial
services sector being one of the most sensitive sectors. This paper analyzes a period of 13 years (2001-2014)
covering the phases of a business cycle starting from boom (2001/02-2006/07), recession (2007/08-2008/09)
and then recovery (2009/10-2013/14). The complete business cycle will aid to demonstrate the results more
accurately. This paper also surveys the topical developments in the empirical capital structure research. The
data for a period of 13 years is analysed using descriptive statistics, correlation and multiple regression
techniques. For research purpose, the ratios such as debt-equity ratio, debt-asset ratio and long term debt are
taken as independent variables whereas Net Profit, Net Profit Margin, ROCE, ROE and ROA are the ratios
taken as dependent variables.
Study of the Static Trade-Off Theory determinants vis-à-vis Capital Structure...inventionjournals
This paper investigates the application of the Static Trade-Off theory regarding the capital structure of the Pakistani Chemical Industry. We have used panel data analysis for the sample of 31 listed chemical firms from the period 2005 to 2013. The study is unique in its type as unlike to Shah & Hijazi (2005) who studied many industrial sections, this study only focuses on the listed Chemical Firms. We used five independent variables such as Profitability (P), Tangibility (T), Liquidity (L), Firm Size (FS) and Total Assets Growth (TAG) to study the effect on independent variable Financial Leverage (FG). The results confirmed the relationship of Profitability, Liquidity and Firm Size. However the results were not confirmed for Tangibility and Firm Assets Growth. Even though the results for Tangibility were positive, however the significance of the coefficients failed to support the hypothesis. This study hold a unique position for researchers for future research and also has significance for the investors helping them to make wise investment decisions when investing in Pakistani Chemical Industry since this industry holds a major portion of industrial GDP of the country
Impact of Firm Specific Factors on Capital Structure Decision: An Empirical S...Waqas Tariq
Abstract This study attempts to explore the impact of firm specific factors on capital structure decision for a sample of 39-firm listed on Dhaka Stock Exchange (DSE) during 2003-2007. To achieve the objectives, this study tests a null hypothesis that none of the firm’s specific factors namely profitability, tangibility, non-debt tax shield, growth opportunities, liquidity, earnings volatility, size, dividend payment, managerial ownership, and industry classification has significant impact on leverage using estimate of fixed effect model under Ordinary Least Square (OLS) regression. Checking multicollinearity and estimating regression analysis through Pearson correlation and autoregressive mode respectively this study found that profitability, tangibility, liquidity, and managerial ownership have significant and negative impact on leverage. Positive and significant impact of growth opportunity and non-debt tax shield on leverage has been found in this study. On the other hand size, earnings volatility, and dividend payment were not found to be significant explanatory variables of leverage. Results also reveal that total debt to total assets ratios are significantly different across Bangladeshi industries. Keywords: Capital structure, Leverage, Firm’s specific factors, Dhaka Stock Exchange Bangladesh.
The Effect of Capital Structure on Firm Performance: Empirical Evidence from ...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Corporate debt policy remained a significant, but a challenging decision for managers entrusted with the responsibility to improve the value of the firm. Thus, this study examines the factors influencing the capital structure decisions of firms in Nigeria. The study employs a panel data regression model to analyze data from firms in Nigeria for the period 2011 to 2015. The result of the empirical analysis reveals that firms in Nigeria have a preference to finance economic operations from retained earnings and the use of short-term debt on rollover basis. The finding of this study confirms that debt decreases with profitability and growth opportunities. The findings show that asset tangibility and firm size have a positive and significant relationship with debt policy of firms in Nigeria. The analysis also reveals that managerial ownership has a negative and significant relationship with debt ratio of firms in Nigeria. The study shows a non-significant positive relationship between non-debt tax shields and debt. The study demonstrates that the trade-off and pecking order theories both explains the factors influencing capital structure decisions of firms in Nigeria. Therefore, this study suggests the need for stakeholders to develop the financial markets and make it accessible for firms to obtain long-term financing for economic growth and development.
Study of the Static Trade-Off Theory determinants vis-à-vis Capital Structure...inventionjournals
This paper investigates the application of the Static Trade-Off theory regarding the capital structure of the Pakistani Chemical Industry. We have used panel data analysis for the sample of 31 listed chemical firms from the period 2005 to 2013. The study is unique in its type as unlike to Shah & Hijazi (2005) who studied many industrial sections, this study only focuses on the listed Chemical Firms. We used five independent variables such as Profitability (P), Tangibility (T), Liquidity (L), Firm Size (FS) and Total Assets Growth (TAG) to study the effect on independent variable Financial Leverage (FG). The results confirmed the relationship of Profitability, Liquidity and Firm Size. However the results were not confirmed for Tangibility and Firm Assets Growth. Even though the results for Tangibility were positive, however the significance of the coefficients failed to support the hypothesis. This study hold a unique position for researchers for future research and also has significance for the investors helping them to make wise investment decisions when investing in Pakistani Chemical Industry since this industry holds a major portion of industrial GDP of the country
Impact of Firm Specific Factors on Capital Structure Decision: An Empirical S...Waqas Tariq
Abstract This study attempts to explore the impact of firm specific factors on capital structure decision for a sample of 39-firm listed on Dhaka Stock Exchange (DSE) during 2003-2007. To achieve the objectives, this study tests a null hypothesis that none of the firm’s specific factors namely profitability, tangibility, non-debt tax shield, growth opportunities, liquidity, earnings volatility, size, dividend payment, managerial ownership, and industry classification has significant impact on leverage using estimate of fixed effect model under Ordinary Least Square (OLS) regression. Checking multicollinearity and estimating regression analysis through Pearson correlation and autoregressive mode respectively this study found that profitability, tangibility, liquidity, and managerial ownership have significant and negative impact on leverage. Positive and significant impact of growth opportunity and non-debt tax shield on leverage has been found in this study. On the other hand size, earnings volatility, and dividend payment were not found to be significant explanatory variables of leverage. Results also reveal that total debt to total assets ratios are significantly different across Bangladeshi industries. Keywords: Capital structure, Leverage, Firm’s specific factors, Dhaka Stock Exchange Bangladesh.
The Effect of Capital Structure on Firm Performance: Empirical Evidence from ...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Corporate debt policy remained a significant, but a challenging decision for managers entrusted with the responsibility to improve the value of the firm. Thus, this study examines the factors influencing the capital structure decisions of firms in Nigeria. The study employs a panel data regression model to analyze data from firms in Nigeria for the period 2011 to 2015. The result of the empirical analysis reveals that firms in Nigeria have a preference to finance economic operations from retained earnings and the use of short-term debt on rollover basis. The finding of this study confirms that debt decreases with profitability and growth opportunities. The findings show that asset tangibility and firm size have a positive and significant relationship with debt policy of firms in Nigeria. The analysis also reveals that managerial ownership has a negative and significant relationship with debt ratio of firms in Nigeria. The study shows a non-significant positive relationship between non-debt tax shields and debt. The study demonstrates that the trade-off and pecking order theories both explains the factors influencing capital structure decisions of firms in Nigeria. Therefore, this study suggests the need for stakeholders to develop the financial markets and make it accessible for firms to obtain long-term financing for economic growth and development.
This paper investigates the relationship between working capital management and financial performance of Pharmaceuticals and Textile firms listed at the Dhaka Securities Exchange in Bangladesh. The data analysis was carried on ten Pharmaceuticals and Textile firms for a period of 2013 to 2017. Secondary Data was analyzed by applying Descriptive Statistics, Regression and Correlation analysis to findthe relationship of current ratio, inventory conversion period and average payment period with Return on Asset. The findings indicate that the Pharmaceuticals and Textile firms’ performance is influenced by the variables relating to working capital. There is a positive relationship between profitability and current ratioand Inventory Turnover period shows a negative relationship with profitability but Average payment period shows insignificant impact on profitability. The study concludes that there exists a relationship between working capital managementand financial performance of Pharmaceuticals and Textile firms in Bangladesh. The study recommends that for the Pharmaceuticals and Textile firms to remain profitable, they should employ working capital management practice that will help in making decisions about investment mix and policy, matching investment to objective, asset allocation for institution and balancing risk against profitability.
International Journal of Engineering Research and DevelopmentIJERD Editor
Electrical, Electronics and Computer Engineering,
Information Engineering and Technology,
Mechanical, Industrial and Manufacturing Engineering,
Automation and Mechatronics Engineering,
Material and Chemical Engineering,
Civil and Architecture Engineering,
Biotechnology and Bio Engineering,
Environmental Engineering,
Petroleum and Mining Engineering,
Marine and Agriculture engineering,
Aerospace Engineering.
Capital Structure Determination, a Case Study of Sugar Sector of Pakistan Fa...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
The following presentation was made by Ronald Eikelenboom, CFO, Philips do BrasilLtd at The Hackett Group’s 20thAnnual Best Practices Conference at Atlanta, GA on 20thMay and is being reproduced with permissions from Philips
This paper investigates the relationship between working capital management and financial performance of Pharmaceuticals and Textile firms listed at the Dhaka Securities Exchange in Bangladesh. The data analysis was carried on ten Pharmaceuticals and Textile firms for a period of 2013 to 2017. Secondary Data was analyzed by applying Descriptive Statistics, Regression and Correlation analysis to findthe relationship of current ratio, inventory conversion period and average payment period with Return on Asset. The findings indicate that the Pharmaceuticals and Textile firms’ performance is influenced by the variables relating to working capital. There is a positive relationship between profitability and current ratioand Inventory Turnover period shows a negative relationship with profitability but Average payment period shows insignificant impact on profitability. The study concludes that there exists a relationship between working capital managementand financial performance of Pharmaceuticals and Textile firms in Bangladesh. The study recommends that for the Pharmaceuticals and Textile firms to remain profitable, they should employ working capital management practice that will help in making decisions about investment mix and policy, matching investment to objective, asset allocation for institution and balancing risk against profitability.
International Journal of Engineering Research and DevelopmentIJERD Editor
Electrical, Electronics and Computer Engineering,
Information Engineering and Technology,
Mechanical, Industrial and Manufacturing Engineering,
Automation and Mechatronics Engineering,
Material and Chemical Engineering,
Civil and Architecture Engineering,
Biotechnology and Bio Engineering,
Environmental Engineering,
Petroleum and Mining Engineering,
Marine and Agriculture engineering,
Aerospace Engineering.
Capital Structure Determination, a Case Study of Sugar Sector of Pakistan Fa...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
The following presentation was made by Ronald Eikelenboom, CFO, Philips do BrasilLtd at The Hackett Group’s 20thAnnual Best Practices Conference at Atlanta, GA on 20thMay and is being reproduced with permissions from Philips
These are the slides I will be using for an executive workshop in Mexico on the topic of "Competitive Advantage through Business Model Design and Innovation"
A Comparative Analysis of Capital Structure between Banking and Non-Banking F...iosrjce
This research aims to compare the capital structure of Bangladeshi banking and non-banking
financial institutions through some measurements. The annual financial statements of 10 commercial banks and
10 non-bank financial institutions were used for this study which covers a period of five (5) years from 2009-
2013. The study assesses the capital structure of the banking and non-banking sectors measured by total debt
to equity ratio (DER), total debt to total funds ratio and performance by ROE, ROA, EPS.Descriptive statistics,
t-test have been used to show the differences between banking and non-banking capital structure and
performance. However this study concludes that there is no significant difference between Bank and non-bank’s
EPS but there is a significant difference between Bank and non-bank’s D/A ratio and D/E ratio and ROA and
ROE.
Financial Structure and the Financial Performance of Quoted Consumer Goods Fi...ijtsrd
The study investigated the effect of financial structure on the financial performance of quoted consumer goods firms in Nigeria. The study used profit after tax PAT to represented financial performance as the dependent variable while financial structure was disintegrated into Short Term Debt STD , Long Term Debt LTD , share capital SC and retained earnings RE as the independent variable. The data for the study were obtained from the Financial Statement and Annual Reports of the selected firms. The data set comprised fifty 50 observations comprising five year time series data spanning 2010 to 2019 from ten firms in the consumer goods sector. The panel regression technique based on Fixed and Random Effects were used for data analyses. The Hausman test showed that the Fixed Effect model is more suitable for the study. The findings revealed that STD and SC have significant positive effects on the PAT of consumer goods firms in Nigeria while LTD and RE were found to have positive but no significant effect on the PAT of consumer goods firms in Nigeria. The study conclude that b working capital management is an efficient tool for the consumer goods subsector in Nigeria. Among the contributions of the study is the use of all the four sources of funds and the use of profit after tax that tends to capture the overall effect of the various fund sources on the holistic profitability of the consumer goods firms. The recommendations included use of share capital for long term investment and working capital management for operations. Daniel, Prince Chinwendu | Dr. Joseph A. Nduka "Financial Structure and the Financial Performance of Quoted Consumer Goods Firms in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-1 , December 2020, URL: https://www.ijtsrd.com/papers/ijtsrd37967.pdf Paper URL : https://www.ijtsrd.com/management/accounting-and-finance/37967/financial-structure-and-the-financial-performance-of-quoted-consumer-goods-firms-in-nigeria/daniel-prince-chinwendu
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
Effect of Financial Ratios on Firm Performance Study of Selected Brewery Firm...ijtsrd
The study assessed the effect of financial ratios on performance of Quoted Breweries firms in Nigeria. It made use of ex post facto research design. Data were gotten from secondary sources obtained from NSE fact books and annual reports accounts of the selected Breweries Companies. The population of the study consisted of thirteen 13 quoted Breweries firms listed on the Nigerian Stock Exchange as at 31st December, 2018. Four 4 of the quoted Breweries firms are selected to form the sample of the study for the period of nine 9 years 2010 – 2018 . The relevant data obtained were subjected to statistical analysis using Pearson correlation coefficient and regression analysis. The results of this study revealed that there is a significant relationship between current ratio and firm performance but negative effect. Debt equity ratio has a significant effect on return on asset of Nigerian Breweries. The result of the study concludes that Nigerian breweries companies are relatively using an optimal mix of debt to equity which is evident from the significant positive relationship of debt equity ratio with financial performance of the Nigerian Breweries. The researchers recommended that the management should employ all carefulness while financing with long term debt instruments endeavor to find out the best and optimal combination of long term debt and equity that will impact positively on the value of the firm. Agbata, Amaka Elizabeth | Osingor, Arinze Stanley | Ezeala, George "Effect of Financial Ratios on Firm Performance: Study of Selected Brewery Firms in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45177.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/45177/effect-of-financial-ratios-on-firm-performance-study-of-selected-brewery-firms-in-nigeria/agbata-amaka-elizabeth
The Impact of Capital Structure on the Performance of Industrial Commodity an...IJEAB
This paper investigates the impact of capital structure on the performance of commodity and service firms listed on the Vietnamese Stock Exchange. Data used in the paper were collected from the 142 firms listed on Ho Chi Minh and Ha Noi Stock Exchange during time 2009-2015. By using the descriptive statistics and linear regression model, the findings shows that there is negative relationship between capital structure (e.i. STD. LTD and DA) and peformance of the firms (i.e. ROE) for the commodity and services firms listed on two given Stock Exchange Market of Vietnam. Following are possible implications for the study.
This paper scrutinizes Determinants of Capital Structure: A study on some selected corporate firms in Bangladesh. We have taken 10 out of 37 listed companies of DSE dividing into two sectors i.e. Pharmaceuticals and chemicals and Tannery sector, five years data from 2013 to 2017 has been collected from respective annual reports. Total number of observations was 50. There are different factors that affect a firm's capital structure decision. We use leverage (D/E ratio) as dependent variable and independent variables are profitability, tangibility, tax, size, growth, non-debt tax shield (NDTS) and financial costs. By using Descriptive Statistical Analysis, Correlation Analysis and Regression Analysis tools we find that Tangibility, size, NDTS, and financial costs are positively related with leverage and Profitability, tax, and growth are negatively related with leverage. In our analysis we see profitability, tangibility of asset, growth and non-debt tax shield have significant association. So when we take capital structure decision of the above firms we should consider profitability, tangibility of asset, growth and non-debt tax shield because other independent variables are insignificant in the context of Bangladesh economy.
Intellectual capital: A modern model to measure the value creation in a businessAI Publications
Using a sample of 92 patients, this study looked into the impact of intellectual capital on the efficiency of private hospitals. The researchers used a quantitative approach to assess the effect of Intellectual capital (Human capital, Structural capital, and Relational capital) on long-term competitive advantage in private hospitals in Iraq's Kurdistan region. The research sample was selected using a random sampling method and conducted in various locations across Iraq's Kurdistan province. A total of 110 questionnaires were distributed, but only 92 people correctly completed them. The findings revealed that the most effective relationship with firm success was between human capital as an element of Intellectual capital, while the least effective relationship was between ownership as an element of Intellectual capital. Furthermore, our findings indicate that finance managers should use debts as a last resort in terms of intellectual capital. Finally, our research can be improved by using more controlled variables, a greater sample size, and data from a longer time span in the regression models. Other methods and steps can be used as well.
A Study on Ratio Analysis at Accord Puducherryijtsrd
The main aim of the study is to investigate the ratio analysis of ACCORD, Puducherry. The financial decision plays a vital role in improving the growth of any organization. The main goal of the accounting department in the firm is to measuring the performance of the organization to its profitability and also measuring the relationship between the net incomes to equity. The data in the present study is fully based on secondary data and it is collected from the past and present performance of ACCORD Puducherry providing financial assistant to entrepreneur. In order to analyze the financial performance of the organization, the ratio analysis, and trend analysis is used. The result clearly shows that there is high degree of current ratio between the net income and equity, and satisfactory level of trend analysis is high in the present year Pramodh. V | Abinayaselvan. V | Sindhuja. K "A Study on Ratio Analysis at Accord Puducherry" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-3 | Issue-6 , October 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29172.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/29172/a-study-on-ratio-analysis-at-accord-puducherry/pramodh-v
Post privatization Corporate Governance and the challenges of working capital...inventionjournals
The paper examines the impact of Corporate Governance on liquidity ratio of Ashaka Cement Company. The variables studied were activity ratio as dependent variables and Corporate Governance proxies as independent variables. Data was collected from the secondary sources, and the statistical tools employed in the Methodology were; Performance Trend Analysis and OLS regression. Trend Analysis result suggests that, liquidity ratio was higher pre privatization periods. Inferential Statistics Result suggests that, minority ownership, board size and privatization have positive and significant impact on liquidity ratio of Ashaka Cement Company, while, Total Market Value of Shares and percentage of non executive directors have negative and significant impact on liquidity ratio of Ashaka Cement Company. However, workforce has positive and insignificant impact on liquidity ratio. The study concludes that, corporate governance has significant impact on liquidity ratio of Ashaka Cement Company. However, unfavourable macroeconomic environment militated against its efficiency. The study recommends that, Nigerian government should ensure favorable macroeconomic environment, Foreign Investors should secure global cement market opportunities to justify investment and enhance companies’ earnings The findings may useful to corporate stakeholders and government policy makers
Firm Characteristics and Financial Performance Evidence from Quoted Manufactu...ijtsrd
This study ascertained the relationship between Firm Characteristics and Financial Performance with a focus on quoted manufacturing firms in Nigeria. The specific objectives are to ascertain the relationship between Leverage, Board Size, and Tobin's Q of quoted manufacturing firms in Nigeria from 2010 2019. This study employed the use of Panel Data and Ex post facto research design. Secondary data were sourced from the publications of Nigeria Stock Exchange NSE and annual reports and accounts of the sampled firms. The data analyses were done through descriptive and inferential statistics. Descriptive statistics was done using trend analysis and multiple comparison of mean standard deviation of variables. Multivariate linear regression analysis via E Views 9.0 statistical software was used to test the hypotheses. The findings of this study are inter alia leverage and board size has significant negative relationship with Tobin's Q at 5 level of significance. It was recommended amongst others that firms need to use proportionate debt financing in relation to total capital financing in order to reverse the inverse relationship between leverage and Tobin's Q. Therefore, firms need to use debt financing up to a point where any extra debt financing reduces net cost to the firm. Okafor, Tochukwu G. | Ossai, Eke Celestine "Firm Characteristics and Financial Performance: Evidence from Quoted Manufacturing Firms in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-6 , October 2021, URL: https://www.ijtsrd.com/papers/ijtsrd47517.pdf Paper URL : https://www.ijtsrd.com/management/accounting-and-finance/47517/firm-characteristics-and-financial-performance-evidence-from-quoted-manufacturing-firms-in-nigeria/okafor-tochukwu-g
An Examination of Effectuation Dimension as Financing Practice of Small and M...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Does Goods and Services Tax (GST) Leads to Indian Economic Development?iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Childhood Factors that influence success in later lifeiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Emotional Intelligence and Work Performance Relationship: A Study on Sales Pe...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Customer’s Acceptance of Internet Banking in Dubaiiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
A Study of Employee Satisfaction relating to Job Security & Working Hours amo...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Consumer Perspectives on Brand Preference: A Choice Based Model Approachiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Student`S Approach towards Social Network Sitesiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Broadcast Management in Nigeria: The systems approach as an imperativeiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
A Study on Retailer’s Perception on Soya Products with Special Reference to T...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
A Study Factors Influence on Organisation Citizenship Behaviour in Corporate ...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Consumers’ Behaviour on Sony Xperia: A Case Study on Bangladeshiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Design of a Balanced Scorecard on Nonprofit Organizations (Study on Yayasan P...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Public Sector Reforms and Outsourcing Services in Nigeria: An Empirical Evalu...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Media Innovations and its Impact on Brand awareness & Considerationiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Customer experience in supermarkets and hypermarkets – A comparative studyiosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Social Media and Small Businesses: A Combinational Strategic Approach under t...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Secretarial Performance and the Gender Question (A Study of Selected Tertiary...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Implementation of Quality Management principles at Zimbabwe Open University (...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Organizational Conflicts Management In Selected Organizaions In Lagos State, ...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
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Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
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Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
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What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...
An Empirical Analysis on the Nature of Relationship between Capital Structure and Firms Performance: A Study of 40 Indian Firms
1. IOSR Journal of Economics and Finance (IOSR-JEF)
e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 6, Issue 6. Ver. I (Nov. - Dec. 2015), PP 12-22
www.iosrjournals.org
DOI: 10.9790/5933-06611222 www.iosrjournals.org 12 | Page
An Empirical Analysis on the Nature of Relationship between
Capital Structure and Firms Performance: A Study of 40 Indian
Firms
Geetika Batra1, Prof. (Dr.) Alka Munjal
Research Scholar, Amity University, Noida, Uttar Pradesh.
Pocket D, Flat no 91, Sarita Vihar, New Delhi 76
Corresponding Author, Dean- Students Academic Affairs and Support Services,
Amity University Campus, Sector 125, E2 Block, II Floor, Gautam Buddha Nagar, Noida,
Uttar Pradesh- 201313.
Abstract: The financing decision with regard to capital structure theory of finance has been a topic of many
theories and their conflicting output for past many years. This paper aims to analyse the nature of relationship
between the capital structure of a firm and its performance. The data of 40 firms excluding financial services
firms listed on Nifty indices on National Stock Exchange is studied (The composition of 50 firms on Nifty
represents a well branch out index reflecting precisely the overall market conditions). Financial services firms
have been excluded from purview of this paper, as they are in the business of collecting money and investing in
financial assets rather than producing goods, hence follow a unique business valuation model. Further financial
services sector being one of the most sensitive sectors. This paper analyzes a period of 13 years (2001-2014)
covering the phases of a business cycle starting from boom (2001/02-2006/07), recession (2007/08-2008/09)
and then recovery (2009/10-2013/14). The complete business cycle will aid to demonstrate the results more
accurately. This paper also surveys the topical developments in the empirical capital structure research. The
data for a period of 13 years is analysed using descriptive statistics, correlation and multiple regression
techniques. For research purpose, the ratios such as debt-equity ratio, debt-asset ratio and long term debt are
taken as independent variables whereas Net Profit, Net Profit Margin, ROCE, ROE and ROA are the ratios
taken as dependent variables.
Key words: Capital Structure, Firms Performance.
I. Introduction
Capital structure is defined as a mix of long term debt, short term debt, ordinary shares and preferred
equity. The capital structure is how a firm finances its overall operations and the growth by using different
sources of funds. Debt as a source of finance comes in the form of bond issues or long term notes payable, while
equity is classified as common stock, preferred stock or retained earnings. Financing of working capital is also
considered as a part of capital structure. At the time of raising finance for various objectives like expansion,
restructuring, acquisitions- the decision regarding how to fund a venture is a centre of discussion.
The firm‟s management is always surrounded by the question as how to manage the balance sheet in a
balanced approach. So there is no trouble of excess cash and liquidity crunch in the firm. To tackle this firstly,
the balance has to be kept between profit retention for reinvestment and profit distribution as dividends.
Secondly, should the firm finance its new venture by raising debt or new equity? So achieving the right capital
structure comprising of equity and debt has been demanding for decades. One of the main objectives of a firm is
to maintain a capital structure that maximises the value of a firm and minimizes its cost of capital which
essentially means raising the funds at a low cost of capital. Cost of capital is a combination of fixed interest paid
to the debenture holders and the dividend paid to the equity share holders. Hence, we can say that the fixed cost
is the key factor whether it is involved in production process or fixed financial charges. The fixed cost should be
kept low if the management is likely to confront an uncertain environment. But how low or how high the fixed
cost should be is the basic question. The market price of the share is also be affected by the capital structure
decision.
The decision regarding the capital structure is to be considered at different stages, initially at the time
of promotion and subsequently, every time when the external funds have to be raised. A demand for raising
funds generates a new capital structure which needs a critical analysis Bodhanwala (2012). Various theories
have stated the relationship between capital structure and firm‟s market value. Traditional theory suggests that
the market value of a firm can be increased up to certain level by substituting debt in place of equity beyond that
the cost of equity and debt starts rising and firm‟s market value declines. But Modigliani and Miller (1958)
changed the paradigm by “Irrelevance Theory” stating that there is no relationship between capital structure and
2. An Empirical Analysis on the Nature of Relationship between Capital Structure and Firms...
DOI: 10.9790/5933-06611222 www.iosrjournals.org 13 | Page
firm‟s market value. They argued that the market values the earning power of a firm‟s fixed assets and that if the
firm‟s capital investment program is held static and certain other assumptions are satisfied, the combined market
value of a firm‟s debt and equity is independent of its choice of capital structure.
The notion of performance can be explained by two interconnected variables: financial and operational.
A firm‟s operational performance can be measured by productivity, growth in sales, returns, sales per employee,
growth in market share whereas the firm‟s financial performance can be measured and reflected by profit
maximisation (Net Profit, Net Profit Margin), wealth maximisation, Return on Assets, Return on Capital
Employed as firm‟s efficiency. Other variables to measure the firm‟s performance are earning per share, residual
income, dividend yield.
The measurement of performance is based upon the information introduced in the measurement
system. The classical indicators for measurement of firm‟s performance used in financial analysis are Net Profit
Margin, Return on Assets, Leverage, Cash flow, efficiency, inventory turnover ratios, receivable turnover ratios.
In addition to these other new indicators of performance are MVA (Market Value added), EVA (Economic
Value added), CFROI (Cash flow Return on Investment), and NPV (Net Present Value).
The choice of variables for measuring firm‟s performance depends upon its objectives. In the paper,
variable selection is based on classical performance indicators reflecting profit and shareholders return
maximisation namely NP, NPM, ROA, ROE and ROCE.
India as an emerging economy is influenced by various factors (internal and external) with regard to
the capital structure decision. The decision regarding the capital structure is affected by economic environment
apart from firm specific factors. The Indian economy was affected by various global crisis and events. The
recent Subprime crisis also affected the world globally and Indian economy in particular. The firms altered their
mode of raising funds as equity markets lost investors confidence and interest rates for debt financing rose. So
the paper also analyze relationship between capital structure and firms performance in phases for the period of
boom from 2001/02-2006/07, recession when subprime crisis hit Indian economy 2007/2008-2008/2009 and
then the period of recovery from 2009/10-2013/14.
The paper is organised as follows: the next section consists of research objectives, followed by
hypotheses of the study, research methodology, some of the theoretical and empirical literature review, analysis
and findings and the last section consists of conclusion.
Research Objective
The objectives of the study are:
To identify the capital structure of a firm.
To analyse the nature of relationship between capital structure and firms performance.
To analyse the nature of relationship between capital structure and firms performance for various phases of
a business cycle (Boom-recession- Recovery).
Debt- Equity ratio (DER), Debt-Asset ratio (DAR) and Long Term Debt to Equity ratio (LTDER) are taken as
dependent variables whereas Net Profit, Net Profit Margin, Return on Equity (ROE), Return on Assets (ROA),
Return on Capital Employed (ROCE) are taken as independent variables for the study.
Hypotheses Of The Study
HI0: There is no significant relationship between capital structure and firms performance.
H1: There is a significant relationship between capital structure and firms performance.
II. Research Methodology
This paper aims to analyse the nature of relationship between the capital structure of a firm and its
performance. Data of 40 companies excluding financial services firms listed on Nifty indices of National Stock
Exchange has been analyzed. Nifty is a composition of 50 well diversified companies representing 12 sectors,
hence reflecting accurately the overall market financial condition. Financial services firms have been excluded
from purview of this paper. A Financial firm is an enterprise such as a bank whose primary business and
function is to collect money from the public and invest it in financial assets and it that does not deal with
production of goods. Further, financial services sector being of the most sensitive sectors with a unique business
valuation model which is unlike with the goods manufacturing firms. In this paper a period of thirteen (13) years
(i.e. 2001-2014) is studied as it reflect upon the several phases of an Indian economy business cycle starting
from boom- recession-depression and then the recovery. Further the period is sub divided into various phases of
a business cycle i.e. boom (2001/02-2006/07)-recession (2007/08-2008/09)-recovery (2009/10-2013/14). There
are 4159 observations from 2001-2014 that have been used for analysis. The aforementioned period will help
3. An Empirical Analysis on the Nature of Relationship between Capital Structure and Firms...
DOI: 10.9790/5933-06611222 www.iosrjournals.org 14 | Page
demonstrate the question of relationship between firm financing and its capital structure accurately. Analysis is
done by using descriptive statistics, correlation and multiple regressions technique.
III. Literature Review
The core objective of financial management is wealth maximization. The wealth maximization is
gained from share price maximization. The first of the serious attempts to explore capital structure choice is the
theory developed by Paton (1922) which postulates that companies value is free of substituting one form of
capital for another in case of no taxation. This conclusion was also supported by the first proposition of
Modigliani and Miller (1958) called Irrelevance Theorem, resting on some simplifying assumptions such as the
presence of efficient capital market, fairly priced securities, and distorting taxes. Their theory believed in 100%
debt financing due to the tax shields on interest payments.1
Tax shielding is an advantage/ benefit that a firm
gets on interest payment of debt. These assumptions given by Arrow- Debreu about the debt irrelevance are
hardly realistic. In 1963 Modigliani and Miller waived off the no tax assumption and considered the advantages
of tax shielding. The general paradigm changed in 1970‟s when many academicians believed that the optimal
capital structure entailed balancing the tax shielding from debt against the present value of bankruptcy costs. It
gained momentum when Miller presented a theory stating that under certain conditions the tax shielding from
debt exactly offset the disadvantage of debt at the personal level. The outcome of this work is that if there are
significant "leverage-related" costs, such as bankruptcy costs, agency costs of debt, and loss of non-debt tax
shields, and if the income from equity is untaxed, then the marginal bondholder's tax rate will be less than the
corporate tax rate and there will be a positive net tax advantage to corporate debt financing. The firm's optimal
capital structure will involve the trade off between the tax advantage of debt and various leverage-related costs.
O‟ Brien, (2003.) On the other hand with regard to Miller and Modigliani propositions, that capital structure
strategy choice is dynamic, not fixed over time. Velanmpy T and Niresh Aloy (2012) stated that the highly
levered institutions explained that the total assets by mainly financed by debt and there is a negative correlation
between capital structure and profitability. If their capital structure choices does not matter as suggested by
Miller (1977) then they would be compelled not to make future capital structure choice that will affect the firm‟s
performance. Ross‟s (1977) model suggested that the values of firms would increase with leverage, since
increasing the market value. Firms with lower expected cash flows find it more costly to raise new debt. So,
when the firm raise new debt, it commits itself to future interest payments and signals about its stable financial
position and ability to make these payments in the future Myers (1984) also stated that company always prefer
internal funding (retained earnings) and then secured debt. Another theory developed on the similar lines by
Leland and Pyle (1977), the higher the quality of the project the manager wants to invest in, the higher will be
the willingness to raising funds. Hence the manager will attract lower debt. The last alternative would be to raise
new equity for financing. Shyam-Sunder and Myers (1999) provides a better explanation than any other
traditional theories in the area of capital structure.
The Pecking order theory by Myers emphasize on taxes and financial distress as important factors. The
researchers started focussing on the relationship between capital structure and company‟s market value through
a concept called as agency theory. The agency theory by Jensen and Meckling (1976), Harri and Raviv (1991)
and Myers (2001) discussed about the concept of conflict between shareholders and managers on one hand and
on the other hand about the potential conflict between the shareholders and debtholders. The conflict arose when
the managers made an attempt to expropriate the wealth of the company to serve their personal motives in place
of company‟s wealth maximization by investing into high risk ventures. The investment in the high risk
ventures concentrated on serving the self motives for maximizing the rewards and compensation of managers
first after that concerning the interests of all other shareholders of a company leading to maximize company‟s
value.
Summing up of capital structure theories
Theory Relationship Causality
Modigliani & Miller Positive Performance affects debt
Trade Off Positive Performance affects debt
Pecking Order Theory Negative Performance affects debt
Agency problem Positive Debt effects performance
Signaling Positive Performance affects debt
Source: Author‟s compilation
There are number of empirical studies which reveal the negative relationship between capital structure
and firms performance. Nor edi and fatihah (2012) identified a negative relationship between capital structure
and firms performance from the Malaysian firms sample. The study by Mustafa and Osama (2007) on Jordanian
100% debt financing is also not possible due to statutory requirements. (Modigliani & Miller (1958)).
4. An Empirical Analysis on the Nature of Relationship between Capital Structure and Firms...
DOI: 10.9790/5933-06611222 www.iosrjournals.org 15 | Page
firms listed on Amman stock market also showed a negative relationship between financial leverage and firm‟s
performance. It means that a firm should finance its operations through debt which may lead to bankruptcy and
decrease in tax shields then to minimize firm‟s performance. It also found that there are no significant
differences between a high levered and a low levered firm to significantly affect the firm‟s performance.
Atseye et.al (2014) found mixed results on the lines of traditional theory of capital structure. They
suggested on judiciously employing of debt for maximization of firms value. Firms can borrow when profit are
high, taking advantage of tax shield. Long term debts should be employed in the financing of long term projects.
And short term debts should be employed in financing fast maturing financial obligation. Financial managers
should then choose policies ending to increase in stock holders‟ wealth. Lawal et al (2014) also found similar
results that capital structure measures (total debt and debt to equity ratio) are negatively related to firm
performance. It is hereby recommended that firms should employ more of equity than debt in financing their
business activities, in as much as the value of a firm can be maximised using debt capital. Hence firms should
establish the point at which the weighted average cost of capital is minimal and maintain that gearing ratio so
that the company‟s value is not be eroded, as the firm‟s capital structure is optimal at this point. Kimberly et al
(2000) found that capital structure may vary even cultural classification of retailers among seven European
countries. They identified that retailer‟s performance is independent of any culture. Capital structure influences
culture. Finally agency conflicts are majorly responsible for overleveraging of retailers resulting in a negative
relationship between capital structure and firms performance. Nirajini and Priya (2013) established a positive
relationship between capital structure and firms performance on Srilankan firms. Saeedi and Mahmoodi (2011)
studied the capital structure and financial performance of Iranian companies considering four performance
measures such as return on assets, return on equity, earning per share and Tobin‟s Q as dependent variable and
three capital structure measures including long term debt, short term debt and total debt ratios as independent
variables of 320 listed companies in Tehran Stock Exchange. They proved that financial performance of the
firms measured by EPS and Tobin‟s Q is significantly and positively associated with capital structure, while
ROA has the negative relation with capital structure and ROE has no significant relation with capital structure.
Data Collection
Data collected for analysis is secondary in nature. A period of thirteen years has been extracted from
PROWESS (an electronic database developed and maintained by Centre for Monitoring Indian Economy). This
study uses accounting data. The data collected is tabulated, analysed and interpreted using AMOS SPSS 21
software.
IV. Analysis & Findings
Data of 40 firms on Nifty on National Stock Exchange (NSE) are considered, the sectoral classification of these
firms is as follow:
Sr. No Sector Number of firms
1 Cement & Cement Products 4
2 Consumer Goods 3
3 Automobile 6
4 Industrial Manufacturing 1
5 Energy 8
6 Telecom 2
7 Pharma 4
8 Metals 5
9 IT 5
10 Construction 1
11 Media & Entertainment 1
Total 40
The total number of observations for a time period of 2001-2-14 of the aforementioned 40 stocks is 4159
considering all the variables (dependent and independent).
The relationship between capital structure and firms performance is analysed by using multiple regression
model:
Yit = αi+ β1 Xit + U it
Where αi is a regression constant, i is firms, t is time period, Yit is a dependent variable, β1 is parameters, Xit
are explanatory variables, and U is a random unobserved component that reflects unobserved shocks affecting
the performance of firms.
5. An Empirical Analysis on the Nature of Relationship between Capital Structure and Firms...
DOI: 10.9790/5933-06611222 www.iosrjournals.org 16 | Page
So the model formed is as follows with regard to the selected dependent and independent variables:
NPit= αi+β1DERit +β2DARit+β3LTDERit+Uit (1)
NPMit= αi+β1DERit +β2DARit+β3LTDERit+Uit (2)
ROEit= αi+β1DERit +β2DARit+β3LTDERit+Uit (3)
ROAit= αi+β1DERit +β2DARit+β3LTDERit+Uit (4)
ROCEit= αi+β1DERit +β2DARit+β3LTDERit+Uit (5)
Where notations:
NP= Net Profit is measured by Profit after tax.
NPM= Net profit margin is measured by Net profit to net sales.
ROE= Return on Equity is measured by profit after tax to equity.
ROA= Return on Assets is measured by profit after tax to Total assets.
ROCE= Return on capital employed is measured by profit after tax to capital employed.
DER= Debt to equity ratio for firm I in year t.
DAR= Debt to asset ratio for firm I in year t.
LTDAR= Long term debt to equity ratio for firm I in year t.
U= error term for firm I in year t.
Descriptive Statistics
Table 1 provides descriptive statistics from year 2001-2014 and further sub sections base on the phases
of a business cycle. In table 1, the mean for DAR is lowest at 9.4% with a minimum variance. The mean for
LTDER is 17.6% during the period from 2001-2014. The mean increased to around 22% around recession
because of augment in debt financing. However this percentage is still less risky for the sample firms. It depicts
that many firms survive on no debt and few are funded by the government. The mean for DER, DAR and
LTDER is least during the boom phase. While the maximum value for DER and LTDER is at 2.598 and 2.522.
The minimum value for DER, DAR and LTDER is zero through all the phases. However, the maximum
increase in debt levels was in the recessionary phase and recovery phase as explained by Table 1.2 and 1.3 to
build up for the losses. This refers to the importance of debt financing to firms for all the decisions in finance.
Moreover equity markets were deficient in confidence during these phases. The DAR also showed the
maximum level during the recession phase. With regard to ROE, ROA and ROCE the figures does not vary to a
great extent between various phases. The mean for NPM speckled very small but its variance speckled high. The
lowest minimum and highest maximum is in recovery phase. This shows that the market in full swing gained
confidence and momentum gradually.
Table 1: Time period 2001-2014
Variables Observations Mean Estimate Variance Minimum Maximum
DER 520 .219 .142 0 2.598
DAR 520 .094 .014 0 0.581
LTDER 520 .176 .108 0 2.522
NP 519 28134.214 1720596782 -46455.5 251229.2
NPM 520 17.993 503.532 -223.63 90.86
ROE 520 29.514 396.620 -37.23 142.68
ROA 520 16.299 81.906 -23.92 50.79
ROCE 520 27.474 384.195 -32.05 130.01
Table 1.1: Boom Phase: Time Period 2001/02-2006/07
Variables Observations Mean Estimate Variance Minimum Maximum
DER 242 .107 .018 0 0.722
DAR 242 .052 .003 0 0.390
LTDER 242 .084 .014 0 0.709
NP 232 15453.52 670313464.9 -2124.5 195063.9
NPM 240 15.489 533.461 -223.63 90.86
ROE 240 23.521 376.705 -37.23 130.01
ROA 240 12.403 82.123 -23.92 50.79
ROCE 240 20.035 376.186 -32.05 130.01
6. An Empirical Analysis on the Nature of Relationship between Capital Structure and Firms...
DOI: 10.9790/5933-06611222 www.iosrjournals.org 17 | Page
Table 1.2: Recession Phase: Time Period 2007/08-2008/09
Variables Observations Mean Estimate Variance Minimum Maximum
DER 81 .292 .204 0 2.227
DAR 81 .141 .021 0 0.562
LTDER 81 .218 .122 0 2.015
NP 81 29333.544 1295325890 -689.5 167016.5
NPM 80 17.343 204.760 -40.05 73.04
ROE 80 24.312 396.620 -37.23 142.68
ROA 80 13.032 81.906 -23.92 50.79
ROCE 80 21.111 384.195 -32.05 130.01
Table 1.3: Recovery Phase: Time Period 2009/10-2013/14
Variables Observations Mean Estimate Variance Minimum Maximum
DER 200 .219 .142 0 2.599
DAR 200 .094 .014 0 0.581
LTDER 200 .176 .108 0 2.522
NP 200 29264.860 1723120647 -46455.5 251229.200
NPM 200 16.005 505.469 -223.630 90.860
ROE 200 23.717 418.462 -37.230 130.010
ROA 200 13.032 81.906 -23.920 50.790
ROCE 200 20.909 412.732 -32.050 130.010
Correlations
Table 2 and its sub tables show the correlation between dependent and independent variables. In table
2, the correlation between DER and DAR, DAR and LTDER is the highest (near to 1). Whereas the correlation
between ROA and DER, ROA and DAR, ROA and LTDER is negative depicting that debt goes without
physical collateral. Similar, association is depicted between ROE and DER, ROE and DAR. The association
between DER and NPM, DAR and NPM, LTDER are found to be negative demonstrating that whenever the
debt level goes up, the profit margins decline in all the phases represented by Table 2.1, 2.2 and 2.3. This
association is positive during boom phase stating with rise in debt level the net profit margins does not decline.
Table 2: Time Period 2001-2014
Variables Pearson
correlation
signed (2
tailed)
DAR DER LTDER NP NPM ROE ROA ROCE
DAR 1 .874 .845 0.018 -0.091 -0.300 -0.439 -0.382
DER .874 1 .967 -0.012 -0.075 -0.237 -0.387 -0.310
LTDER .845 .967 1 0.012 -0.041 -0.210 -0.352 -0.285
NP 1 0.157 0.050 0.116 0.063
NPM 1 0.277 0.493 0.279
ROE 1 0.800 0.980
ROA 1 0.821
ROCE 1
Table 2.1 Boom Phase: Time Period 2001/02-2006/07
Variables Pearson
correlation
signed (2
tailed)
DAR DER LTDER NP NPM ROE ROA ROCE
DAR 1 .824 .820 0.031 0.072 -0.221 -0.234 -0.220
DER .824 1 .953 0.007 0.012 -0.168 -0.303 -0.198
LTDER .820 .953 1 0.009 0.047 -0.160 -0.271 -0.186
NP 1 0.061 -0.042 -0.036 -0.023
NPM 1 0.298 0.519 0.305
ROE 1 0.804 0.983
ROA 1 0.823
ROCE 1
Table 2.2 Recession Phase: Time Period 2007/08-2008/09
Variables Pearson
correlation
signed (2
tailed)
DAR DER LTDER NP NPM ROE ROA ROCE
DAR 1 .743 .716 -0.027 -0.194 -0.300 -0.439 -0.382
DER .743 1 .928 -0.065 -0.165 -0.237 -0.387 -0.310
LTDER .716 .928 1 -0.031 -0.095 -0.210 -0.352 -0.285
NP 1 0.140 0.081 0.137 -0.096
NPM 1 -0.061 -0.012 -0.043
ROE 1 0.800 0.980
ROA 1 0.821
ROCE 1
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DOI: 10.9790/5933-06611222 www.iosrjournals.org 18 | Page
Table 2.3 Recovery Phase: Time Period 2009/10-2013/14
Variables Pearson
correlation
signed (2
tailed)
DAR DER LTDER NP NPM ROE ROA ROCE
DAR 1 .874 .845 0.018 -0.091 -0.440 -0.439 -0.520
DER .874 1 .967 -0.012 -0.075 -0.335 -0.387 -0.418
LTDER .845 .967 1 0.012 -0.041 -0.286 -0.352 -0.374
NP 1 0.157 0.168 0.116 0.168
NPM 1 -0.085 0.493 -0.083
ROE 1 -0.163 0.984
ROA 1 -0.171
ROCE 1
Regression Analysis
The regression analysis of the study is divided into four tables each reflecting a different time phase.
Table 3 with its sub tables show the results for regression analysis over a time period from 2001-2014. For Net
Profit as an independent variable, the Beta is negative with DER and positive with DAR and LTDER. It shows
that when DER goes up by 1, NP goes down by .460 and vice versa for DAR and LTDER. Similarly the values
of beta for other independent variables such as NPM, ROE, ROA and ROCE are negative for DER and positive
with DAR and LTDER. This depicts that when DER will go up by a certain percentage, the value of
independent variable will go down by their respective betas and vice versa. The regression weight for DER in
the prediction of NP is significantly different from zero at the 0.05 level (two-tailed). The „p‟ value is less than
.05 for DER and LTDER so they have a significant impact on NP. The value of R2
very low, this explains that
the independent variables can‟t really explain the dependent variable. It is estimated that the predictors
(independent variables) of NP explain 1.2 percent of its variance. In other words, the error variance of NP is
approximately 98.8 percent of the variance is explained by variables not captured by the model. Moreover, „p‟
value is less than 5% as in case of DER & LTDER it implies they have significant impact on ROA. As per the
beta value of LTDER -.349 for a given 1% change in LTDER, ROA will change by 34.9% in opposite direction
and this is a significant change because „p‟ value is less than 5%. The „p‟ value for them is also greater than .05
showing insignificant impact on independent variables. The value of R2
is very low for NPM and ROE at 2.3
percentages and 9.8 percentages respectively. However the value of R2
for ROA and ROCE is slightly higher at
15.1 percentages and 20 percentages respectively.
Time Period 2001-2014
Table 3
Table 3.1: Regression results for Net Profit and independent variables
DV INV Estimate Beta S.E. C.R. P
NP DER -50586.322 -.460 20813.394 -2.430 .015
NP DAR 43927.563 .125 31621.037 1.389 .165
NP LTDER 44707.617 .354 21730.163 2.057 .040
R2
.012
* S.E is standard error, C.R is critical ratio
Table 3.2: Regression results for NPM and independent variables
DV INV Estimate Beta S.E. C.R. P
NPM DER -26.600 -.447 11.208 -2.373 .018
NPM DAR -20.421 -.108 17.027 -1.199 .230
NPM LTDER 32.955 .482 11.701 2.816 .005
R2
.023
* S.E is standard error, C.R is critical ratio
Table 3.3: Regression results for ROE and Independent variables
S.E is standard error, C.R is critical ratio
Table 3.4: Regression results for ROA and independent variables
DV INV Estimate Beta S.E. C.R. P
ROA DER -8.373 -.349 4.089 -2.048 .041
ROA DAR -32.603 -.426 6.213 -5.248 ***
ROA LTDER 9.546 .347 4.269 2.236 .025
R2
.200
* S.E is standard error, C.R is critical ratio
DV INV Estimate Beta S.E. C.R. P
ROE DER -9.350 -.177 9.560 -.978 .328
ROE DAR -65.867 -.391 14.524 -4.535 ***
ROE LTDER 17.699 .292 9.981 1.773 .076
R2
.098
8. An Empirical Analysis on the Nature of Relationship between Capital Structure and Firms...
DOI: 10.9790/5933-06611222 www.iosrjournals.org 19 | Page
Table 3.5: Regression results for ROCE and independent variables
* S.E is standard error, C.R is critical ratio
Boom Phase: Time period: 2001/02-2006/07
Table 4, explains the regression analysis for boom phase. In table 4.1, the beta estimates are negative
for DER and LTDER with NP at -.045 and -.012. It depicts that when NP goes up by 1 then DER and LTDER
goes down by -.045 and -.012 standard deviation with a „p‟ value greater than .05 showing that there is no
significant change. Whereas when the NP goes up by 1 the DAR goes up by .080 standard deviation. The beta
for DER is negative across all the dependent variables. The beta for LTDER is positive across all the dependent
variables. The Beta for DAR is positive for ROA and NPM while negative for ROE and ROCE. The value of R2
is almost negligible for NP. For NPM it will have significant change with beta -.454 as the „p‟ value is less than
.05. „p‟ value when less than 5% as in case of DER and DAR it implies they have significant impact on ROA
and ROE. As per the beta value of DER -.506 for a given 1% change in DER, ROA will change by 50.6% in
opposite direction and this is a significant change because p value is less than 5%. The values of R2
for NPM,
ROE and ROCE is also slightly low at 2.1 percentages, 5 percentages and 5 percentages respectively. The value
of R2
is 9.6 percentages for ROA. This explains than the independent variables can‟t really explain the
dependent variable.
Table 4
Table 4.1: Regression results for NP and independent variables
DV INV Estimate Beta S.E. C.R. P
NP DER -8689.054 -.045 41735.281 -.208 .835
NP DAR 35686.495 .080 51406.547 .694 .488
NP LTDER -2679.178 -.012 46846.745 -.057 .954
R2
.002
* S.E is standard error, C.R is critical ratio
Table 4.2: Regression results for NPM and independent variables
DV INV Estimate Beta S.E. C.R. P
NPM DER -78.493 -.454 38.447 -2.042 .041
NPM DAR 69.551 .162 52.131 1.334 .182
NPM LTDER 65.518 .332 42.279 1.550 .121
R2
.021
*S.E is standard error, C.R is critical ratio
Table 4.3: Regression results for ROE and independent variables
DV INV Estimate Beta S.E. C.R. P
ROE DER -2.318 -.016 31.606 -.073 .942
ROE DAR -99.441 -.278 42.856 -2.320 .020
ROE LTDER 13.949 .085 34.756 .401 .688
R2
.050
*S.E is standard error, C.R is critical ratio
Table 4.4: Regression results for ROA and independent variables
DV INV Estimate Beta S.E. C.R. P
ROA DER -34.095 -.506 14.192 -2.402 .016
ROA DAR 9.354 .056 19.244 .486 .627
ROA LTDER 12.562 .163 15.607 .805 .421
R2
.096
* S.E is standard error, C.R is critical ratio
Table 4.5: Regression results for ROCE and independent variables
DV INV Estimate Beta S.E. C.R. P
ROCE DER -18.083 -.125 31.140 -.581 .561
ROCE DAR -67.513 -.189 42.223 -1.599 .110
ROCE LTDER 14.770 .090 34.243 .431 .666
R2
.050
* S.E is standard error, C.R is critical ratio
DV INV Estimate Beta S.E. C.R. P
ROCE DER -6.132 -.118 9.126 -.672 .502
ROCE DAR -77.596 -.469 13.865 -5.597 ***
ROCE LTDER 13.435 .225 9.528 1.410 .159
R2
.151
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DOI: 10.9790/5933-06611222 www.iosrjournals.org 20 | Page
Recession Phase: Time Period 2007/08-2008/09
During recession phase the value of Beta is negative for DER and DAR across all the dependent
variables. The value of beta is slightly higher as compared to above mentioned time phase. This depicts that
inverse relationship between dependent and independent variable. The recessionary phase in Indian market
witnessed the low confidence on equity segment. As the markets were at lows, share prices plummeted and
inflation rose to all time highs due to subprime crisis. The „p‟ value is greater than .05 for all the dependent
variables which does not explain any significant change except ROA with DER and LTDER. The beta for ROA
with DER and LTDER is -.349 and -.347 which explains for a given 1% change in DER and LTDER, ROA will
change by 34.9% and 34.7% respectively in opposite direction and this is a significant change because „p‟ value
is less than 5%. The value of R2
is on the lower side, the maximum value of R2
is for ROA at 20 percentages.
This depicts that the independent variables can‟t really explain the dependent variable.
Table 5.1: Regression results for NP and independent variables
DV INV Estimate Beta S.E. C.R. P
NP DER -22341.186 -.281 24783.207 -.901 .367
NP DAR 8308.921 .034 41096.299 .202 .840
NP LTDER 21044.205 .206 30727.818 .685 .493
R2
.011
* S.E is standard error, C.R is critical ratio
Table 5.2: Regression results for NPM and independent variables
DV INV Estimate Beta S.E. C.R. P
NPM DER -14.246 -.452 9.635 -1.479 .139
NPM DAR -18.138 -.186 15.941 -1.138 .255
NPM LTDER 18.655 .457 11.956 1.560 .119
R2
.067
*, S.E is standard error, C.R is critical ratio
Table 5.3: Regression results for ROE and independent variables
DV INV Estimate Beta S.E. C.R. P
ROE DER -9.350 -.177 9.560 -.978 .328
ROE DAR -65.867 -.391 14.524 -4.535 ***
ROE LTDER 17.699 .292 9.981 1.773 .076
R2
.098
* S.E is standard error, C.R is critical ratio
Table 5.4: Regression results for ROA and independent variables
DV INV Estimate Beta S.E. C.R. P
ROA DER -8.373 -.349 4.089 -2.048 .041
ROA DAR -32.603 -.426 6.213 -5.248 ***
ROA LTDER 9.546 .347 4.269 2.236 .025
R2
.247
* S.E is standard error, C.R is critical ratio
Table 5.5: regression results for ROCE and independent variables
DV INV Estimate Beta S.E. C.R. P
ROCE DER -6.132 -.118 9.126 -.672 .502
ROCE DAR -77.596 -.469 13.865 -5.597 ***
ROCE LTDER 13.435 .225 9.528 1.410 .159
R2
.191
*S.E is standard error, C.R is critical ratio
Recovery Phase: Time Period 2009/10-2013/14
During the recovery phase, the beta coefficient for most of the dependent variables remained negative
with independent variables. The beta estimate for LTDER is positive for all the dependent variable and the
values are also slightly higher for increase as compared with abovementioned time phases. The „p‟ value is less
than .05 for NP with DER and LTDER, NPM with DAR and LTDER, ROE with LTDER, ROA with DAR and
LTDER and ROCE with LTDER. This explains for any given change in beta the dependent variable will change
and this change will be significant. The value of R2
also rose with a maximum of around 31 percentages in
terms of the predictors of ROCE explains its variance. The least R2
value is for NPM at 6.4%. The highest value
for R2
is 31 percentages on ROCE, which is slightly higher to depict the explanation for independent variables.
10. An Empirical Analysis on the Nature of Relationship between Capital Structure and Firms...
DOI: 10.9790/5933-06611222 www.iosrjournals.org 21 | Page
Table 6.1: Regression results for NP and independent variables
DV INV Estimate Beta S.E. C.R. P
NP DER -50545.585 -.459 20937.907 -2.414 .016
NP DAR 41624.057 .119 31810.206 1.309 .191
NP LTDER 44998.580 .356 21860.161 2.058 .040
R2
.044
*, S.E is standard error, C.R is critical ratio
Table 6.2: Regression results for NPM and independent variables
DV INV Estimate Beta S.E. C.R. P
NPM DER -24.073 -.487 20.046 -1.201 .230
NPM DAR -66.102 -.389 30.370 -2.177 .030
NPM LTDER 41.324 .758 18.857 2.191 .028
R2
.064
*, S.E is standard error, C.R is critical ratio
Table 6.3: Regression results for ROE and independent variables
*S.E is standard error, C.R is critical ratio
Table 6.4: Regression results for ROA and independent variables
DV INV Estimate Beta S.E. C.R. P
ROA DER -8.373 -.349 4.089 -2.048 .041
ROA DAR -32.603 -.426 6.213 -5.248 ***
ROA LTDER 9.546 .347 4.269 2.236 .025
R2
.200
* S.E is standard error, C.R is critical ratio
Table 6.5: Regression results for ROCE and independent variables
DV INV Estimate Beta S.E. C.R. P
ROCE DER -9.837 -.236 14.421 -.682 .495
ROCE DAR -120.094 -.840 21.828 -5.502 ***
ROCE LTDER 27.757 .605 13.571 2.045 .041
R2
.309
* S.E is standard error, C.R is critical ratio
V. Conclusion
The study investigates the relationship between capital structure and firm‟s performance for the 40
firms listed on Nifty on National Stock Exchange excluding financial services firms. The study used five
dependent variables (NP, NPM, ROE, ROA and ROCE) to examine the relationship between capital structure
and firms performance with three independent variable (DER, DAR, LTDER). The study proved that the
relationship of capital structure with ROE, ROA, and ROCE is negative. However quantum of this negative
relationship is not significant. Although during the boom phase relationship of NP and NPM is positively
associated with capital structure. Moreover the relationship among the dependent variables such as ROE &
ROA, ROE & ROCE and ROA & ROCE is significantly positive. The relationship for the aforementioned
variables is negative during recession and recovery phases. Though it is not a sector specific study and includes
various sector firms listed on Nifty excluding financial services firms. As the financial services sector includes
Banks and banking related firms which are very sensitive to not only firm specific factors but also to
macroeconomic factors. It shows that the relationship between capital structure and firms performance can not
only be explained by internal/firm specific factors but also with external/macroeconomic factors. This analysis
also demonstrated that the independent variables cannot explain the dependent variables significantly. It only
covers the temporal movements in the variables. This study can be further extended by increasing the number of
independent variables for the set of dependent variables.
DV INV Estimate Beta S.E. C.R. P
ROE DER -16.138 -.385 15.117 -1.068 .286
ROE DAR -114.925 -.798 22.881 -5.023 ***
ROE LTDER 37.051 .801 14.226 2.605 .009
R2
.251
11. An Empirical Analysis on the Nature of Relationship between Capital Structure and Firms...
DOI: 10.9790/5933-06611222 www.iosrjournals.org 22 | Page
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