Journal articles on the topic 'Financial distress. Capital structure. Acquisitions'
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Babatunde Bunmi, Osifalujo, Isiaka Najeem Ayodeji, and Olufemi O. Omotilewa. "Merger and Acquisition and Perfomance of Deposit Money Banks in Nigeria: Pre and Post Analysis." Sumerianz Journal of Business Management and Marketing, no. 312 (December 4, 2020): 183–91. http://dx.doi.org/10.47752/sjbmm.312.183.191.
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Low capital base, insolvency, poor corporate governance and incessant banks distress among other factors have contributed to the recent failure of banks in Nigeria. To curb such challenges, banks all over the world now adopt mergers and acquisitions as a strategy to improve their performances. Therefore, this study examined the impact of mergers and acquisition on the performance of deposit money banks in Nigeria. The study considered capital structure, asset profile, total deposit and profit after tax of the selected bank as the measurement for the performance and effect of merger and acquisition of the bank in both pre and post merger and acquisition period. Data were collected from the published financial statements of the bank namely former Intercontinental Bank Plc and Access Bank (now Access Bank Plc) from 2005 to 2017 and the model was formulated using ordinary least square method. It was revealed that for both the pre-merger and post-merger periods, it was revealed that the access bank performed better. In the post – merger and acquisition period as asset profile and total deposit has no significant effect on the profit after tax of access bank in Nigeria, while capital structure has a significant effect on profit after tax of access bank plc. While in the pre-merger and acquisition capital structure, asset profile and total deposit have no significant impact on profit after tax of access bank plc. The study concludes that mergers and acquisitions have a significant impact on the performance of deposit money bank in Nigeria. Therefore, the study recommended that banks can merge or acquire one and other. This has proved to be an effective strategy for rescuing ailing or weak banks. This would provide financial muscles and managerial competence that would enhance financial performance.
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Bernardo, Antonio E., Alex Fabisiak, and Ivo Welch. "Asset Redeployability, Liquidation Value, and Endogenous Capital Structure Heterogeneity." Journal of Financial and Quantitative Analysis 55, no. 5 (August 22, 2019): 1619–56. http://dx.doi.org/10.1017/s0022109019000644.
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Firms with lower leverage are not only less likely to experience financial distress but are also better positioned to acquire assets from other distressed firms. With endogenous asset sales and values, each firm’s debt choice then depends on the choices of its industry peers. With indivisible assets, otherwise-identical firms may adopt different debt policies, with some choosing highly levered operations (to take advantage of ongoing debt benefits) and others choosing more conservative policies to wait for acquisition opportunities. Our key empirical implication is that the acquisition channel can induce firms to reduce debt when assets become more redeployable.
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Kaaro, Hermeindito. "KEBANGKRUTAN VERSUS RESTRUKTURISASI: EVALUASI DAN PREDIKSI KELANGSUNGAN HIDUP PERUSAHAAN PASCA KRISIS KEUANGAN 1997." KINERJA 8, no. 1 (November 20, 2016): 1–26. http://dx.doi.org/10.24002/kinerja.v8i1.805.
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The purposes of this study are to evaluate the persistence in healthy firms during financial crisis periods, to predict healthy firms based on some relevant variables, and to evaluate the effectiveness of the change of company strategic attributes to cope with the financial distress, and to avoid firms bankruptcy in the future. This study provides a methodology that useful to evaluate and predict firm performance. This study uses statistical and qualitative approaches in order to get comprehensive conclusion whether non-healthy firms can increase their performance or not.Twelve selected variables are employed to predict the healthy firms from one through four periods (from 1994 through 1999) before the events (from 1998 through 2000). Seven strategic attributes are identified during the crisis periods to evaluate the change of firm performance. Four major research findings can be summarized as follows. First, there is persistence in the firm performance. The non-healthy firms underperform healthy firms and they also persistently have the worst performance in one and two next years. Second, two business risk proxies, sales stability and standard deviation of return on investment, are consistently significant in predictingthe healthy firms. The effect of investment opportunity, leverage (financial risk), and liquidity in predicting the healthy firms is relatively moderate from one through four years before the event years. While other variables including dividend policy, earning stability, and assets structure are less consistent to predict the healthy firms due to the bias of multicolinearity effects. This study also finds that using univariate t-test, most variables of the two sub-samples (healthy versus nonhealthy firms) are significantly different for all periods, except 1994. Third, the results of predictionmodels are robust. The models provide highly accurate results in matching the classifications of actual observations and the prediction results, range from 86,8% through 100%. Fourth, four strategic attributes, the change of director boards, the composition change of capital ownerships, strategic alliances, and acquisitions, are effective to increase the firm performance. However, surprise that debt restructuring is less powerful to cope with the firm financial distress during three year periods of analysis.Keywords: healthy firm, debt restructuring, corporate strategy, business and financial risks
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S.R., Vishwanath, Jaskiran Arora, Durga Prasad, and Kulbir Singh. "Wockhardt Limited: will it rise from the ashes?" CASE Journal 14, no. 5 (September 10, 2018): 567–92. http://dx.doi.org/10.1108/tcj-05-2017-0041.
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Synopsis The case provides an introduction to how currency mismatches create exposures, why and how companies hedge (or do not hedge) those exposures, alternate valuation models and the use of foreign currency convertibles in funding a global expansion program. The case highlights the ambitious growth strategy of Wockhardt, a global biopharmaceutical company. In a bid to dominate the biopharmaceutical market, Wockhardt grew aggressively by acquiring companies all over the world. This expansion was funded by a mix of secured loans (bank borrowings) and unsecured loans including foreign currency (US dollar denominated) convertible bonds (FCCBs). Due to deteriorating business and economic conditions, the company experienced a sharp decline in profitability and stock price resulting in a debt overhang. The company had to restructure its capital structure in March 2009 to escape bankruptcy. Since FCCB holders did not agree to restructure the terms of the instrument, the company had to turn to senior lenders to restructure debt. The company’s management is faced with several options to deal with financial distress. The case asks students to evaluate those options. The case can be used to teach hedging foreign currency exposures, design of capital structure in rapidly evolving industries and dangers of financing R&D intensive ventures with convertible debt denominated in foreign currencies. Research methodology The case is based on secondary data sources. Information statements filed with the Securities Exchange Board of India, the company’s website, press releases and security analyst reports formed the basis for this case. Supplementary information was gathered from the CAPITALINE database, and websites of the Bombay Stock Exchange and the National Stock Exchange of India. Sources of information are documented appropriately in the case and teaching note. No names in the case have been disguised. The authors have no personal relationship with the company. Relevant courses and levels The case is suitable for courses in corporate finance, mergers and acquisitions, international financial management, corporate restructuring and valuation at the graduate level. It can also be used in executive education programs. Theoretical bases The case provides an introduction to how currency mismatches create exposures, why and how companies hedge (or do not hedge) those exposures, alternate valuation models, the use of foreign currency convertibles in funding a global expansion program and the alternatives in corporate restructuring. Suitable references are provided in the teaching note.
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García, C. José, and Begoña Herrero. "Female directors, capital structure, and financial distress." Journal of Business Research 136 (November 2021): 592–601. http://dx.doi.org/10.1016/j.jbusres.2021.07.061.
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Gertler, Mark, and R. Glenn Hubbard. "Taxation, Corporate Capital Structure, and Financial Distress." Tax Policy and the Economy 4 (January 1990): 43–71. http://dx.doi.org/10.1086/tpe.4.20061792.
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Heinkel, Robert, and Josef Zechner. "Financial Distress and Optimal Capital Structure Adjustments." Journal of Economics Management Strategy 2, no. 4 (December 1993): 531–65. http://dx.doi.org/10.1111/j.1430-9134.1993.00531.x.
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Kristanti, Farida Titik, Sri Rahayu, and Deannes Isynuwardhana. "Integrating Capital Structure, Financial and Non-Financial Performance: Distress Prediction of SMEs." GATR Accounting and Finance Review 4, no. 2 (July 31, 2019): 56–63. http://dx.doi.org/10.35609/afr.2019.4.2(4).
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Objective – The growth of SMEs in Indonesia is rising from year to year. As an anticipation of bankruptcy, predictions can be made in an integrated means from the perspective of capital structure, financial, and non-financial performance. Methodology/Technique – A sample of 39 companies were selected using purposive sampling during the research period of 2013-2017. The results of the statistical logistic regression show that profitability is an important factor in predicting financial distress of the SMEs in Indonesia. Findings – The operating income to total assets has a negative and significant effect on SMEs financial distress. Meanwhile, retained earnings to total assets have a positive impact. Indonesian SMEs must be efficient in their operational costs to avoid financial distress. Novelty – In addition, sales are also important. If the company's sales are high, and the operational cost efficiency is maintained, the retained earnings will increase. This means that the company will be safe and able to avoid financial distress. Type of Paper: Empirical. Keywords: Capital Structure; Financial; Distress; Non-Financial; Performance. Reference to this paper should be made as follows: Kristanti F T; Rahayu S; Isynuwardhana D; 2019. Integrating Capital Structure, Financial and Non-Financial Performance: Distress Prediction of SMEs, Acc. Fin. Review 4 (2): 56 – 62 https://doi.org/10.35609/afr.2019.4.2(4) JEL Classification: G32, G33, G34.
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Wardhana, Rony, Muslich Anshori, and Heru Tjaraka. "Determinants Moderators of Financial Distress: An Evidence Affiliation Group and Political Connection." AKRUAL: Jurnal Akuntansi 14, no. 1 (October 8, 2022): 132–47. http://dx.doi.org/10.26740/jaj.v14n1.p132-147.
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There is a theoretical gap in the research during the research period, so it is necessary to reconcile the findings, which is expected to be useful for all parties, academics, practitioners and related companies. The analysis used in this research is the Smart PLS tool. The population in this study are all manufacturing industrial companies listed on the Indonesia Stock Exchange for the 2017-2020 period. The sample of this study amounted to 144 companies. Tax aggressiveness shows results that do not affect the capital structure of manufacturing companies. Investment decisions affect the increase in capital structure in manufacturing companies. The capital structure shows a strong influence on financial distress in manufacturing companies. The results of the indirect effect test explain that tax aggressiveness has no significant effect on financial distress through capital structure. The results of the indirect effect test explain the substantial impact of investment decisions on financial distress through capital structure. The results of the moderating effect test show that the capital structure has no significant effect on financial distress with group affiliation moderation. The results of the moderating effect test explain the significant effect of capital structure on financial distress by moderating political connections.
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Artamevia, Baiq Vica, and Nanik Wahyuni. "PROFITABILITAS TERHADAP FINANCIAL DISTRESS DIMODERASI STRUKTUR MODAL." El Muhasaba Jurnal Akuntansi 13, no. 2 (July 6, 2022): 161–69. http://dx.doi.org/10.18860/em.v13i2.15823.
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This study aims to determine the effect of profitability on financial distress moderation of capital structure is carried out to be a research renewal. profitability is projected by ROA and ROE, while the capital structure is projected by DER. The research uses financial reports and annual reports to complete the research data. The population and sample used are coal sector companies listed on the Indonesia Stock Exchange (IDX) with an observation period of 2018 to 2020. Data analysis uses SmartPls3 software by utilizing the Path Coefficient test to test hypothesis. The results show that profitability has no effect on financial distress in brick-and-mortar companies and the capital structure is not able to influence the relationship between profitability and financial distress in coal sector companies.
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Oliveira, Mauro, Palani-Rajan Kadapakkam, and Mehdi Beyhaghi. "Effects of customer financial distress on supplier capital structure." Journal of Corporate Finance 42 (February 2017): 131–49. http://dx.doi.org/10.1016/j.jcorpfin.2016.11.009.
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Dini, Siti, Selvia Selvia, Venny Octavia, and Cyndi Natalia Br Sidebang. "Struktur Modal, Profitabilitas, Likuiditas, Leverage dan Financial Distress." E-Jurnal Akuntansi 31, no. 11 (November 28, 2021): 2761. http://dx.doi.org/10.24843/eja.2021.v31.i11.p07.
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This study aims to determine the effect of capital structure, profitability, liquidity and leverage in predicting the potential for financial distress. This research includes causative research to see the relationship between variables. The data used is quantitative data from the Indonesia Stock Exchange. The research population is large trading companies on the IDX for the 2017-2019 period. The sample used as many as 33 companies. This research uses binary logistic regression analysis technique with SPSS 26.0 tool. The results showed that capital structure with DER proxies, profitability with ROA proxies and liquidity with CR proxies had no effect on financial distress. Meanwhile, leverage with DAR proxy has a significant positive effect on financial distress.
Keywords : Financial Distress; Capital Structure; Profitability; Liquidity and Leverage.
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Bahri, Maharawati, Rina Br Bukit, and Keulana Erwin. "Effects of Return on Assets, Firm Size, and Institutional Ownership on Financial Distress with Capital Structure as a Moderating Variable (An Empirical Study on the Manufacturing Companies Listed on Indonesia Stock Exchange)." International Journal of Research and Review 9, no. 10 (October 7, 2022): 131–41. http://dx.doi.org/10.52403/ijrr.20221015.
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This research investigates and tests the effects of Return on Assets, firm size, and institutional ownership on financial distress in the manufacturing companies listed on the Indonesia Stock Exchange and whether the capital structure can moderate the correlation between independent and dependent variables. This causal research uses secondary data, which are analyzed using SPSS. It takes the manufacturing companies listed on Indonesia Stock Exchange from 2016 until 2020 as the population. The purposive sampling technique is employed to select 84 companies and obtain 420 observations by multiplying the sample by five years of research. The findings indicate that partially Return on Assets has positive and significant effects on financial distress, firm size has positive and significant effects on financial distress, and institutional ownership has negative and insignificant effects on financial distress. In addition, the capital structure cannot moderate the effects of Return on Assets, firm size, and institutional ownership on financial distress. Keywords: return on assets, firm size, institutional ownership, capital structure, financial distress.
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Laidroo, Laivi. "Väätsa Agro AS financial distress." Emerald Emerging Markets Case Studies 2, no. 8 (October 17, 2012): 1–13. http://dx.doi.org/10.1108/20450621211308113.
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Subject area Corporate finance, financial management. Study level/applicability The case is suitable for Master's level corporate finance or financial management courses. Sufficient prior theoretical knowledge of corporate finance concepts is required. Case overview Väätsa Agro AS is an Estonian dairy farming company. Although the company had operated successfully in the past, its ownership changed significantly in 2006 leading to changes in the company's capital structure. Starting from 2008 milk prices on global markets decreased and this trend had also affected the company's profits. As a result of these developments the company's financial situation had deteriorated since 2008 and towards the end of 2009 the company had problems in meeting its obligations. On 1 September 2009 its owners hired a consultancy firm represented by Karl Kukk to tackle the company's problems. Expected learning outcomes The case should help students to: understand the risks of LBOs; understand the importance of an appropriate capital structure of a firm; evaluate a company's financial situation and compare it with competitors; understand the alternatives facing firms in financial distress; and choose the best course of action for a distressed firm considering the pros and cons of each alternative for each stakeholder group. Supplementary materials Teaching notes are available; please consult your librarian for access.
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Czarnota, Zbyszko. "Mergers and acquisitions in Greece." Open Political Science 2, no. 1 (December 31, 2019): 197–99. http://dx.doi.org/10.1515/openps-2019-0019.
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AbstractThe financial crisis has paradoxically protected many sectors of the Greek economy from collapse. The ownership structure of companies in Greece was dominated by state and local government companies. Private companies have not only contributed capital and protected employees from unemployment, but have also given a new organisational culture to companies.
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Azis, Safira Nurmalika, and Shiddiq Nur Rahardjo. "ANALISIS FAKTOR-FAKTOR YANG MEMPENGARUHI FINANCIAL DISTRESS PADA PERBANKAN YANG TERDAFTAR DI BURSA EFEK INDONESIA." Jurnal REKSA: Rekayasa Keuangan, Syariah dan Audit 7, no. 2 (August 30, 2020): 117. http://dx.doi.org/10.12928/j.reksa.v7i2.2797.
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This study aims to examine whether financial ratios have an influence on financial distress. The dependent variable in this study is financial distress which is measured using a dummy variable. The independent variables in this study are CAR, NPL, ROA, ROE and capital structure. In addition, this study also uses the Altman model to determine the level of bankruptcy in banks This study also uses dummy variables to find out which banks are healthy and unhealthy. Hypothesis testing of this study was carried out using logistic regression analysis. This study provides statistical results that show that the CAR has a negative and significant effect on financial distress, ROA has a negative and significant effect on financial distress and the capital structure has a positive and significant effect on financial distress. Whereas NPL and ROE do not have an influence on financial distress.
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Masardi, Dani, Maulan Irwadi, and Lukita Tripermata. "Pengaruh Rasio Keuangan dan Kondisi Financial Distress Terhadap Struktur Modal Pada Perusahaan Manufaktur Goldenblossom Sumatera (Gbs)." Jurnal Ilmu Sosial, Manajemen, Akuntansi dan Bisnis 2, no. 3 (October 1, 2021): 44–54. http://dx.doi.org/10.47747/jismab.v2i3.418.
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This study aims to examine the effect of financial ratios and financial distress on the capital structure of the manufacturing company Golden Blossom Sumatra (GBS). This research uses secondary data. In the data collection stage, researchers used documentation techniques. The collected data were then analyzed using multiple linear regression methods. The results of this study indicate that the activity ratio and profitability ratio have a positive effect on the capital structure, while the liquidity ratio, solvency and financial distress have no positive effect on the capital structure.
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Bjuggren, Per-Olof. "A transaction cost perspective on financial distress and capital structure." International Review of Law and Economics 15, no. 4 (December 1995): 395–404. http://dx.doi.org/10.1016/0144-8188(95)00037-2.
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Virainy, Antonius Enrico,. "FAKTOR-FAKTOR YANG MEMPENGARUHI FINANCIAL DISTRESS PADA PERUSAHAAN MANUFAKTUR." Jurnal Paradigma Akuntansi 2, no. 1 (January 8, 2020): 439. http://dx.doi.org/10.24912/jpa.v2i1.7173.
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The purpose of this research is to know the effect of capital structure, firm size, asset tangibility, profitability and age of firm against financial distress on manufacturing company listed in BEI from 2015-2017. This research used 198 observations that were selected using purposive sampling methodin three years. This research uses EVIEWS software version 10 to analyse the hypothesis. The result for this research showed that there is a positive effect of capital structure on financial distress and there is negative effect between firm size, asset tangibility and profitability on financial distress. However, age of firm did not have any effect on financial distress.
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Christopher Promise, Ozobugha, and Ebiaghan Orits Frank Phd. "Does Mergers and Acquisitions Impact Capital Structure and Performance of Nigerian Banks?" International Journal of Research Publication and Reviews 03, no. 12 (2022): 2397–410. http://dx.doi.org/10.55248/gengpi.2022.31278.
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The study examines the association between merger and acquisition on capital structure, and financial performances of banks in Nigeria. it employed secondary data collected from the sampled banks annual financial report and accounts statement. Relevant literatures were reviewed and panel data model regression was employed in the study’s analysis. Specifically, feasible generalized least square model was used to analyse the study’s hypotheses after the pre- and postestimation diagnosis. The study reveals that merger and acquisition have a strong direct effect on capital structure and performances, but a weak direct impact on survival and growth of the examined banks in Nigeria. The study recommends that weak banks in Nigeria should employ merger and acquisition strategy for their survival and growth, for a viable capital structure and for banks whose performance are below expectations.
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Suryani, Ani Wilujeng, and Alfin Nadhiroh. "Intellectual Capital and Capital Structure Effect on Firms’ Financial Performances." Journal of Accounting Research, Organization and Economics 3, no. 2 (August 31, 2020): 127–38. http://dx.doi.org/10.24815/jaroe.v3i2.17258.
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Objective – This study aims to determine the influence of intellectual capital and capital structure on financial performance in manufacturing companies in Indonesia. Design/methodology – The data were collected from all 140 manufacturing companies from 2015 to 2019. While most studies of intellectual capital were conducted by using multiple regression analysis, we investigate the impact of intellectual capital and capital structure on the financial performance by using weighted least square regression.Results – The results showed that intellectual capital has a significant positive effect on firms’ financial performances, but the capital structure has a negative effect. The results of this study are beneficial for managers to consider increasing intellectual capital to create a competitive advantage in the midst of fierce competition of the ASEAN Economic Community era. In addition, managers need to consider the optimum capital structure to fulfill funding needs, hence financial distress can be minimized.Limitation/Suggestion - This study is a quantitative study limited to the availability of the data. Also, a number of outliers were found in the data and treated prior to the analysis.
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Rosa, Paulo Sérgio, and Ivan Ricardo Gartner. "Financial distress in Brazilian banks: an early warning model,." Revista Contabilidade & Finanças 29, no. 77 (December 20, 2017): 312–31. http://dx.doi.org/10.1590/1808-057x201803910.
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ABSTRACT This study aims to propose an early warning model for predicting financial distress events in Brazilian banking institutions. Initially, a set of economic-financial indicators is evaluated, suggested by the risk management literature for identifying situations of bank insolvency and exclusively taking public information into account. For this, multivariate logistic regressions are performed, using as independent variables financial indicators involving capital adequacy, asset quality, management quality, earnings, and liquidity. The empirical analysis was based on a sample of 142 financial institutions, including privately and publicly held and state-owned companies, using monthly data from 2006 to 2014, which resulted in panel data with 12,136 observations. In the sample window there were nine cases of Brazilian Central Bank intervention or mergers and acquisitions motivated by financial distress. The results were evaluated based on the estimation of the in-sample parameters, out-of-sample tests, and the early warning model signs for a 12-month forecast horizon. These obtained true positive rates of 81%, 94%, and 89%, respectively. We conclude that typical balance-sheet indicators are relevant for the early warning signs of financial distress in Brazilian banks, which contributes to the literature on financial intermediary credit risk, especially from the perspective of bank supervisory agencies acting towards financial stability.
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Pratiwi, Dina Octavia, Tri Ratnawati, and Achmad Maqsudi. "The Effect of Asset Growth, Sales Growth and Capital Structure on Financial Distress and Value of the Firm in Sub-Sector Food and Beverage with Good Corporate Governance as Moderation." IJEBD (International Journal of Entrepreneurship and Business Development) 6, no. 1 (January 31, 2023): 53–69. http://dx.doi.org/10.29138/ijebd.v6i1.2140.
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Purpose: The value of the firm is an important factor to determine the success of an enterprise. This study has eight problem formulations.
Design/methodology/approach: The variables used in this study are asset growth, sales growth, capital structure, financial distress, the value of the firm, and good corporate governance as moderation. The population used in the study was 26 sub-sectors of food and beverage. As a sample, the researchers used many as 13 sub-sector of food and beverage. The research period was three years (2019-2021) during the pandemic Covid-19.
Findings: The results of the study showed that asset growth had no effect or was not significant to the value of the firm, sales growth had no effect or insignificant effect on the value of the firm, and capital structure had an effect, in another word it was significant to the value of the firm, asset growth had no effect or was not significant to financial distress, sales growth had an effect or were significant to financial distress, the capital structure was influential and significant to financial distress, financial distress had no effect or insignificant effect on the value of the firm and financial distress with the value of the firm moderated by good corporate governance produces insignificant.
Research limitations/implications: Based on the conceptual framework, researchers used Partial Least Square data processing and obtained three significant results, namely capital structure has a significant effect on the value of the firm, asset growth has a significant effect on financial distress and good corporate governance has a significant effect on the value of the firm. While the five influences are not significant.
Paper type: Research paper
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Bertuahc, Eka, and Erlane K. Ghani. "Bulls and Bears and Bankruptcy- An Early Warning of Distress." Journal of Social Sciences Research, SPI 1 (March 15, 2019): 95–102. http://dx.doi.org/10.32861/jssr.spi1.95.102.
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This study examines possible indicators of financial distress: financial ratio; financial decision; the preferences of investors; and economic macro conditions. Based on these indicators, the model of financial distress was constructed using capital structure theory. The population in this study is manufacturing companies listed on The Indonesian Stock Exchange from 2003 to 2016. This study relies on the composite market index to detect whether the market is bullish or bearish using regression analysis time series. Then, the factor analysis and logistic regression are used. Models which predict financial distress in bearish markets are more accurate than in a bullish market. Investors, therefore, are more vulnerable ina bullish market. Equity financing will reduce the probability of financial distress in both bullish and bearish markets. This supports the pecking order theory in capital structure - when the companies need funding, an early funding alternative is to retain earnings.
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Bertuah, Eka, and Erlane K. Ghani. "Bulls and Bears and Bankruptcy- An Early Warning of Distress." Journal of Social Sciences Research, Special Issue 5 (December 15, 2018): 962–69. http://dx.doi.org/10.32861/jssr.spi5.962.969.
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This study examines possible indicators of financial distress: financial ratio; financial decision; the preferences of investors; and economic macro conditions. Based on these indicators, the model of financial distress was constructed using capital structure theory. The population in this study is manufacturing companies listed on The Indonesian Stock Exchange from 2003 to 2016. This study relies on the composite market index to detect whether the market is bullish or bearish using regression analysis time series. Then, the factor analysis and logistic regression are used. Models which predict financial distress in bearish markets are more accurate than in a bullish market. Investors, therefore, are more vulnerable ina bullish market. Equity financing will reduce the probability of financial distress in both bullish and bearish markets. This supports the pecking order theory in capital structure - when the companies need funding, an early funding alternative is to retain earnings.
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Boloupremo, Tarila, and Samson Ogege. "Mergers, Acquisitions and Financial Performance: A Study of Selected Financial Institutions." EMAJ: Emerging Markets Journal 9, no. 1 (August 5, 2019): 36–44. http://dx.doi.org/10.5195/emaj.2019.162.
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The aim of the study is to examine the impact of mergers and acquisition on financial performance in the Nigerian financial system. The study examined selected financial institutions in the banking sector. Specifically, some financial indicators such as asset profile, credit risk, capital structure, liquidity, size and cost control ratios, were extracted from the audited financial reports of the selected banks for the period 2000-2010 to compare the performance of the selected financial institutions in the ex-ante period and compare these performance with the ex post period of their mergers and acquisitions. Longitudinal and time series analyses were employed to observe the performance of the selected banks. Results from the analysis suggest that credit risks showed a better post merger performance, but were statistically insignificant and negatively related with the performance of the selected financial institution pre-merger. Asset profile was found to be significant and positively related with post-merger in relation to the performance of the selected financial institutions, but it was insignificant and negatively related to the financial performance of the selected firms pre-merger. Capital structure of the selected firms was found to be significant and positively related to the performance of the firms’ pre-merger, but insignificant and negatively related to the performance of the firms post-merger. Liquidity of the firms indicated a significant and positive relationship with the performance of the banks pre-merger. However, post merger result indicates that, there was no significant and positive relationship between the liquidity of the firms and financial performance post-merger. The size of the selected banks indicated a significant relationship with their performance in both the pre-merger and post-merger periods. The cost control variable indicated a statistically significant and negative relationship with the performance of the banks post-merger period, but showed no significant relationship with performance of the banks in the pre-merger period. Finally, the results indicate that mergers and acquisitions can have significant impact on the performance of the selected financial institutions in Nigeria.
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Ikpesu, Fredrick, and Osazemen C. Eboiyehi. "Capital structure and corporate financial distress of manufacturing firms in Nigeria." Journal of Accounting and Taxation 10, no. 7 (September 30, 2018): 78–84. http://dx.doi.org/10.5897/jat2018.0309.
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Sibilkov, Valeriy. "Asset Liquidity and Capital Structure." Journal of Financial and Quantitative Analysis 44, no. 5 (October 2009): 1173–96. http://dx.doi.org/10.1017/s0022109009990354.
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AbstractThis paper tests alternative theories about the effect of asset liquidity on capital structure. Using data from a broad sample of U.S. public companies, I find that leverage is positively related to asset liquidity. Further analysis reveals that the relation between asset liquidity and secured debt is positive, whereas the relation between asset liquidity and unsecured debt is curvilinear. The results are consistent with the view that the costs of financial distress and inefficient liquidation are economically important and that they affect capital structure decisions. In addition, the results are consistent with the hypothesis that the costs of managerial discretion increase with asset liquidity.
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MUHAMMAD REZA FAHLEVI and AAN MARLINAH. "THE INFLUENCE OF LIQUIDITY, CAPITAL STRUCTURE, PROFITABILITY AND CASH FLOWS ON THE COMPANY’S FINANCIAL DISTRESS." Jurnal Bisnis dan Akuntansi 20, no. 1 (July 3, 2019): 59–68. http://dx.doi.org/10.34208/jba.v20i1.409.
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Financial distress is a complicated phase and multidimensional problem facing by the company. Since it leads the company on the possibility of bankruptcy, this situation needs immediately to be recovered. This study aims to determine the factors that influence the company's financial distress. There are ten variables in this study which are classified into four categories: liquidity, capital structure, profitability and cash flows. This study used financial statement data of manufacturing company which is listed in Indonesia Stock Exchange during the threeyear study period from 2011 to 2013. There are some criteria in choosing the representative sample so that the sum of the companies are 90 companies or equal to 270 financial statements data. The empirical findings show that there are only three variables that influence the company’s financial distress. The significant variables are current ratio (liquidity), return on assets (profitability) and cash flow ratio (cash flow).
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Akmalia, Alien. "PENGARUH STRUKTUR MODAL, STRUKTUR ASET DAN PROFITABILITAS TERHADAP POTENSI TERJADINYA FINANCIAL DISTRESS PERUSAHAAN (Studi pada Perusahaan Manufaktur Sektor Aneka Industri yang Terdaftar di Bursa Efek Indonesia periode 2014-2017)." Business Management Analysis Journal (BMAJ) 3, no. 1 (April 25, 2020): 1–21. http://dx.doi.org/10.24176/bmaj.v3i1.4613.
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The purpose of this study is to examine the effect of capital structure proxied by Financial Leverage and Equity Structure, Asset Structure and Profitability to the potential for Financial Distress in the company. The sample used in this study is various industrial sector manufacturing companies listed on the Indonesia Stock Exchange during the period 2014 to 2017. The sample selection method used was the purposive sampling method. Hypothesis testing is done using logistic regression. Based on the results of hypothesis testing it can be concluded that the financial leverage variable is proven to have a significant positive effect on the likelihood of financial distress, the Asset Structure Variable is proven to have a significant negative effect on the likelihood of financial distress, as well as the Return on Asset variable also has a significant negative effect on the likelihood of financial distress . While the Equity Structure variable was not proven significant in influencing the likelihood of financial distress in the company.
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Rana Shahid Imdad Akash, Muhammad Mudasar Ghafoor, and Nida Siddique. "Impact of Macroeconomic Conditions, Industry Attributes and Firms Related Variables on Capital Structure: A Cross Industry Analysis." Journal of Business and Social Review in Emerging Economies 6, no. 1 (March 31, 2020): 287–300. http://dx.doi.org/10.26710/jbsee.v6i1.1058.
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Purpose: This study is conducted to examine the main strength of firms’ specific variables, industry effects and macroeconomic conditions in predicting the capital structure choices of non financial listed companies of Pakistan Stock Exchange (PSX-100). Design/Methodology/Approach: To perform the study, a sample of twelve sectors covering a period from 2012 to 2017 is taken from PSX-100. Seemingly Unrelated Regression (SUR) model is applied to explore the capital structure choices. Results of study indicate that the short term debt plays a major part in designing the capital structure of listed companies of PSX-100.
Findings: Macroeconomic conditions have been identified to cause an increase in financial distress and costs of debt unanimously. The financial distress and costs are significant in financial market developments for a time horizons.
Implications/Originality/Value: The development in financial markets can have an opportunity to increase the choice of capital structure of firms optimistically. It is explored that source of capital choice seems to decrease in agency behavior and risk due to refinancing. The less agency problem and less risk provide better choice of debt and future growth to the financial market. The growth environment is life blood of financial market and economy.
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N Ahkam, Sharif, Nazmun Nahar, and Shabnin Rahman Shorna. "Management of Receivables, Financial Distress, and Profitability in Bangladesh." Asian Economic and Financial Review 11, no. 9 (September 8, 2021): 710–23. http://dx.doi.org/10.18488/journal.aefr.2021.119.710.723.
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If a firm's profitability is affected by inefficient working capital practices, it is logical to assume that an adjustment of working capital will improve profitability. In particular, small and medium-sized businesses in the least developed countries (LDCs) and the new economies of Europe suffer from long delays relating to the payment of dues which threaten their survival. When the policies and practices are reasonably efficient, tweaking practices is not expected to be very beneficial. We should observe benefits from adjusting working capital practices for those companies that are clearly outside the norm in the industry. A major part of working capital management is receivables management and collection. In this study, we examine the data on receivables from Bangladesh from 2000 to 2017 to see if companies with inefficient working capital levels benefit from adjusting toward the norm, which is a new way of examining the benefits of adjustment. Specific actions and reactions will depend on the situation. Any adjustments that management make to fine-tune working capital management are unlikely to produce much value unless the underlying circumstances are taken into account. A new firm with a compelling case of quality and competitive strength may be more successful in managing a successful low average collection period (ACP) operating structure, and keeping the ACP low is strongly advised.
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Ntoung Agbor Tabot, Lious, Galván Cecilio Huarte, and Félix Puime Guillén. "Capital structure determinants: Evidence from Spanish listed firms." Corporate Ownership and Control 13, no. 4 (2016): 506–19. http://dx.doi.org/10.22495/cocv13i4c3p9.
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Using annual data that records leverage levels of 77 non-financial firms in Spain prior and during the financial crisis, we demonstrate that tangibility, size, volatility, profitability, non-debt tax shield, growth opportunities and industry effect are factors that determine the capital structure of a company. Our results show that leverage is positively and statistically significant with size, non-debt tax shield and industry-effect. Our findings illustrate that profitability; growth opportunity and volatility are negatively and statistically significant with the debt issues on the balance sheet of these public traded firms. We discuss the extent to which these results are consistent with empirical evidence illustrated by prior studies with reference to the 2008 financial crisis. Also, during the 2008 financial crisis the cost of financial distress is high, and as such when size is used as a proxy for the probability of bankruptcy a negatively relationship is inevitable. Lastly, majority of the listed firms were more attached by equity finance as a result of the reluctant behavior of the international investors and the falling Spanish economy.
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Kasozi, Jason, and Sam Ngwenya. "The capital structure practices of listed firms in South Africa." Corporate Ownership and Control 8, no. 1 (2010): 624–36. http://dx.doi.org/10.22495/cocv8i1c6p4.
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This study investigates whether financial theory is aligned with financial practice by testing two conventionally recognised theories of capital structure choice, the trade-off theory and the pecking-order theory against the financing practices of listed firms on the Johannesburg Stock Exchange (JSE) during the period 1995-2005. Data were obtained from the McGregor database. The results indicated a unique, but significantly positive, correlation between debt financing and financial distress, and a significant negative correlation between debt financing and the collateral value of assets. These findings suggest that financial theory is not aligned with practice on firms listed on the JSE. This study attempts to contribute to efforts to align financial theory with practice, and to help future researchers advance or modify current theories.
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Buus, Tomáš. "Cost of Financial Distress in the Cash Flow Model of Capital Structure." Český finanční a účetní časopis 2014, no. 3 (October 1, 2014): 46–58. http://dx.doi.org/10.18267/j.cfuc.408.
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Safitri, Mita Ayu, and Indah Yuliana. "Pengaruh Return on Assets, Current Ratio dan Firm Size Terhadap Prediksi Kebangkrutan Dengan Struktur Modal sebagai Variabel Moderasi." JURNAL AKUNTANSI DAN BISNIS : Jurnal Program Studi Akuntansi 7, no. 1 (May 27, 2021): 90–99. http://dx.doi.org/10.31289/jab.v7i1.4517.
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This study aims to determine: the prediction results of bankruptcy in basic and chemical industry companies listed on the IDX for the 2016-2019 period and to determine the effect of return on assets, current ratio and company size on financial distress. Based on the purposive sampling method, there were 38 companies sampled. The method of analysis used is descriptive statistical method using Moderated Regression analysis tools. The results of this study indicate that the current ratio has a significant positive effect on financial distrees. Return on assets and company size have no effect on financial distrees. Capital structure is able to moderate the relationship between return on assets and financial distress. The capital structure is unable to moderate the relationship between current ratios and company size to financial distress in basic industrial and chemical companies. By using the Grover model, it can be that of the thirty eight samples all companies have no potential.
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Bastomi, Mohamad, and Meldona Meldona. "ANALISIS PREDIKSI FINANCIAL DISTRESS SERTA PENGARUHNYA TERHADAP HARGA SAHAM DENGAN STRUKTUR MODAL SEBAGAI VARIABEL INTERVENING (Studi pada Perusahaan Jasa yang Terdaftar di Bursa Efek Indonesia Tahun 2009–2013)." IQTISHODUNA 11, no. 2 (October 6, 2016): 90–101. http://dx.doi.org/10.18860/iq.v11i2.3706.
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All of investors value that financial distress conditions and the proportion of financial capitalstructure have effect to become fluctuation of stocks price. Therefore, the aim of this research is to know theeffects of financial distress to the stocks’ price either direct or indirect through financial capital structure. Thisresearch uses descriptive quantitative approach by using sector of service listed in BEI year 2009–2013 as theobject. The sampling method used is purposive sampling. There are 23 companies that have categorized assample. The method that used to predict financial distress is z-score Altman method, whereas to analyst thehypothesis is used path analysis through SPSS TEST by consideration of test classic assumption. Based onthe result the research shows that financial distress gives negative impact to the stocks’ price. Financialdistress caused by capital loss so decrease work of money that effect to the decrease stocks price. It might becaused of using financial structure proportion doesn’t cause business risk that will emerge financial Distressuntil it doesn’t moving stocks price. From Altman z-score prediction shows from 23 companies 10 of it (APOL,BIPP BLTA, BTEL, FMII, HITS, IATA, LIMAS, RIMO, and TKGA) include on financial distress category.Meanwhile, 5 companies (BHIT, BKDP BMSR, OKAS, and ZBRA) include on gray area. Furthermore 8 companies(ASIA, BNBR, CENT, ELTY, LCGP, META, TRIL, and TRUB) include in save condition.
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Udin, Shahab, Muhammad Arshad Khan, and Attiya Yasmin Javid. "The effects of ownership structure on likelihood of financial distress: an empirical evidence." Corporate Governance: The International Journal of Business in Society 17, no. 4 (August 7, 2017): 589–612. http://dx.doi.org/10.1108/cg-03-2016-0067.
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Purpose The purpose of this paper is to explore the role of corporate governance proxies by ownership structure on the likelihood of firms’ financial distress for a sample of 146 Pakistani public-limited companies listed at the Karachi Stock Exchange over the period of 2003-2012. Design/methodology/approach The dynamic generalized method of moments (GMM) estimator and panel logistic regression (PLR) are used to determine the impact of corporate governance on the financial distress. The ownership structure is used as a determinant of corporate governance, while the Altman Z-score is utilized as an indicator of financial distress, as it measures financial distress inversely. The smaller the values of the Z-score, the higher will be the risk of financial distress. Findings The authors find insignificant impact of ownership structure on firms’ likelihood of financial distress based on the dynamic GMM method. However, the PLR results indicate that foreign shareholdings have a significant negative association with firms’ likelihood of financial distress, in the case of Pakistan. An evidence of a negative and insignificant relationship between institutional ownership and financial distress was observed, which indicates the passive role of institutional investors in Pakistan. The results also reveal a positive and significant relationship between insider’s ownership and likelihood of financial distress. This finding is consistent with the entrenchment hypothesis which predicts that insiders are more aligned with their self-interest than outside shareholders’ interest when their shareholding increases in the business. Furthermore, the results also reveal insignificant association between government shareholdings and the probability of financial distress. The reason could be the social welfare objective of the government entities rather than profit maximization. Practical implications The findings of this study provide more insight to corporate managers and investors about the association between the quality of corporate governance and the degree of financial distress, with respect to Pakistani firms. Furthermore, this study contributes to the existing literature by adding new evidence from developing countries like Pakistan which are helpful for regulatory bodies and policymakers in the formulation of long-term corporate governance strategies to manage the financial distress. It is well established that strengthening the quality of corporate governance practices enhances the efficiency of capital markets and reduces the probability of financial distress. Originality/value The study extends the body of existing literature on corporate governance and the likelihood of financial distress with reference to Pakistan. The results suggest that policymakers may pay special attention to the quality of corporate governance, specifically ownership structure, while predicting corporate financial distress.
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Dogru, Tarik. "Under- vs over-investment: hotel firms’ value around acquisitions." International Journal of Contemporary Hospitality Management 29, no. 8 (August 14, 2017): 2050–69. http://dx.doi.org/10.1108/ijchm-04-2016-0219.
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Purpose The purpose of this study is to analyze the extent to which under- and over-investment problems affect hotel firms’ value around the time when acquisitions are announced. Design/methodology/approach Hotel firms are classified based on their financial constraints (under-investment), corporate governance mechanisms (over-investment) and organizational structures. Multivariate analyses are conducted utilizing the panel ordinary least squares regression to examine the effects of financial constraints, corporate governance mechanisms and organizational structures on acquisition returns. Findings The results show that financial constraints have a larger effect on the firm value compared to the effect of corporate governance. Also, acquisitions are viewed as over-investments in poorly governed, franchising and hotel-real estate investment trust (REIT) firms. Research limitations/implications The analyses are limited to gains from acquisitions in the hotel industry. Therefore, future studies may examine the effects of capital expenditures and cash holdings on hotel firm value. Practical implications Acquisitions could help financially constrained firms reduce informational asymmetries. Firms could expand through franchising when they are financially constrained. However, franchising firms should take restrictive actions to control managers from making acquisitions. The hotel-REIT organizational form does not seem to cause under-investment problems, and it functions as an additional corporate governance mechanism. Originality/value In addition to the C-corporation organizational structure, hotel firms extensively adopt REIT and expand through franchising, which might affect under- and over-investment problems. Nonetheless, little is known about whether capital investments create or reduce value for hotel firms. This study helps to explain how financial constraints, corporate governance mechanisms and organizational structures affect hotel firms’ value.
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Yusuf, Muhammad, and Andika Kurniawan. "Pengaruh Non-Debt Tax Shield Dan Cost Of Financial Distress Terhadap Struktur Modal Pada Perusahaan Sub Sektor Logam Dan Sejenisnya Yang Terdaftar Di Bursa Efek Indonesia (BEI) Tahun 2013-2017." Neraca : Jurnal Akuntansi Terapan 1, no. 1 (April 1, 2020): 55–73. http://dx.doi.org/10.31334/neraca.v1i1.647.
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This research aims to provide the influence of non-debt variable tax shield and cost of financial distress affect the capital structure of the company's sub-sector metals and the like listed on the Indonesia Stock Exchange in 2013-2017. The method on this research is a quantitative approach with the type of correlation study. The data collection techniques in this study use secondary data with saturated sampling techniques. The population of this research is a metal sub-sector company and the like listed on the Indonesia Stock Exchange (IDX). The samples in this study were as many as 16 metal sub-sector companies and the like listed on the Indonesia Stock Exchange (IDX). The results showed that both the partial and simultaneous variables of the non-debt tax shield and cost of financial distress had no effect on the capital structure of the metal sub-sector companies and the like listed on the Indonesia Stock Exchange ( IDX). It shows that the T-Test in a non-debt tax shield variable is obtained by the T-calculate result of 1.401 and the value of Sig. T. Acquired by 0, 165 > 0.05, then Ho accepted and H1 rejected which means there is no positive influence on the capital structure and in variable cost of financial distress obtained with the result of T-Calculate of 1.756 and the value of Sig. T. Acquired by 0, 083 > 0.05, then Ho is accepted and H1 is rejected which means there is no positive influence on the capital structure. Then simultaneously F test result in can with a fcalculate value of 2.295 with a level of Sig. 0, 108, because of the value of Sig. F > 0.05, then Ho accepted and H1 rejected. This means that there is no variable influence of non debt tax shield (X1) and cost of financial distress (X2) to the capital structure (Y).
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Fathihani, Vely Randyantini, Ika Puji Saputri, and Fitri Ayu Kusuma Wijayanti. "Pengaruh Pengungkapan Corporate Social Responsibility, Struktur Modal, dan Financial Distress terhadap Return Saham Perusahaan Manufaktur yang Terdaftar di BEI Tahun 2017-2021." Jurnal Samudra Ekonomi dan Bisnis 14, no. 1 (January 17, 2023): 15–24. http://dx.doi.org/10.33059/jseb.v14i1.6046.
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The purpose of this study was to analyze the effect of corporate social responsibility disclosure, capital structure and financial distress on stock returns. The sample is a manufacturing company listed on the IDX between 2017 and 2021. The sampling method was carried out using the convenience sampling method, namely the sample was determined with certain considerations so that 38 companies were selected. Data analysis procedure with multiple linear regression analysis. The test results show that partially, capital structure and financial distress have a positive and significant effect on stock returns; while CSR disclosure proved to have no significant effect on stock returns. Simultaneously, the three independent variables analyzed proved to have a significant effect on stock returns.
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Raflis, Ratnawati, and Enny Arita. "Impak Struktur Modal, Struktur Kepemilikkan dan Karakteristik Perusahaan Terhadap Financial Distress dan Financial Health Perusahaan." Jurnal Ekonomi dan Bisnis Dharma Andalas 23, no. 1 (January 31, 2021): 135–49. http://dx.doi.org/10.47233/jebd.v23i1.199.
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Corona Virus Pandemic affected the world economy, including Indonesia. Many companies are out of business due to this pandemic.With the background of the conditions mentioned above, the researchers are interested in examining more deeply the variables that determine the level of financial distress and at the same time the financial health of the company. Furthermore, the variables that are used as independent variables and are thought to affect the company's financial performance are capital structure, ownership structure and company characteristics. In assessing financial performance, the Altman Z Score model is used and then to see the impact of the variables that are thought to affect the company's financial performance.The research model used is the Logistic Regression equation.Population and sample are taken from financial data of companies listed on the Indonesia Stock Exchange. Data is taken manually on the website: www.idx.co.id. And the period in this study was taken from 2015-2019. The test results prove that the Capital Structure and Ownership Structure are factors that have a significant influence on the Company's Financial Distress and Financial Health.
ABSTRAK
Pandemi Virus Corona berimbas pada perekonomian dunia tidak terkecuali pada perekonomian di Indonesia. Banyak perusahaan yang gulung tikar akibat pandemik ini. Dengan berlatar belakang kondisi tersebut diatas maka peneliti tertarik untuk mengkaji lebih dalam menentukkan variabel yang sangat menentukan tingkat Financial Distress dan sekaligus financial health (Kinerja Keuangan) perusahaan. Selanjutnya variabel yang di jadikan variabel independen dan di duga berpengaruh terhadap kinerja keuangan perusahaan adalah struktur modal, struktur kepemilikkan dan Kharakteristik Perusahaan. Dalam menilai kinerja keuangan maka digunakan model Altman Z Score dan selanjutnya untuk melihat dampak variabel yang di duga berpengaruh terhadap kinerja keuangan perusahaan. Model penelitian yang di pakai adalah persamaan Logistic Regression. Model ini kemudian akan di lakukan uji T , Uji F dan Uji Asumsi Klasik sebelum di gunakan dalam melihat signifikasi variabel independen terhadap variabel dependen. Populasi dan sampel diambil dari data keuangan perusahaan yang terdaftar di Bursa Efek Indonesia. Data diambil secara manual di website: www.idx.co.id. Periode pada penelitian ini diambilkan data dari tahun 2015-2019. Hasil Pengujian membuktikan bahwa Struktur Modal dan Struktur Kepemilikkan adalah faktor yang sangat berpengaruh signifikan terhadap Financial Distress dan Financial Health Perusahaan.
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Salehi, Mahdi, Afsaneh Lotfi, and Shayan Farhangdoust. "The effect of financial distress costs on ownership structure and debt policy." Journal of Management Development 36, no. 10 (November 13, 2017): 1216–29. http://dx.doi.org/10.1108/jmd-01-2017-0029.
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Purpose The purpose of this paper is to examine the effect of financial distress costs, corporate growth rate, and flexibility on the interaction between ownership structure and corporate debt policy. Design/methodology/approach The authors test the hypotheses by employing simultaneous equations system methodology with two-stage least squares regression and panel data technics on a sample of 786 listed companies on the Tehran Stock Exchange during 2010-2015. Findings The results indicate that there is a positive and significant relationship between corporate debt level and managerial ownership in the Iranian listed companies. The authors also find no convincing evidence that either the firm’s growth or financial health could influence or moderate this interrelationship. Research limitations/implications The implications drawn from this study are constrained by two primary limitations. First, the present study is conducted in an Iranian setting; therefore, the data utilized for the study only contain companies listed on the Tehran Stock Exchange. The utilization of listed companies on the Tehran Stock exchange is likely to affect the generalizability of the study in a national context. Second, the authors were unable to extend the sample time period due to some major deficiencies in the Tehran Stock Exchange library and its supplementary software. Social implications Since the fundamental institutional assumptions underpinning the western and even East Asia capital structure models are not valid in the institutional environment of Iran, the findings could provide substantial implications for our understanding of capital structures as well as debt policy literature. Originality/value This is an innovative research in terms of the mutual relationship between debt and ownership structure and the use of equations system to measure the interaction between them.
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Kyriazopoulos, George. "Corporate governance and capital structure in the periods of financial distress. Evidence from Greece." Investment Management and Financial Innovations 14, no. 1 (May 12, 2017): 254–62. http://dx.doi.org/10.21511/imfi.14(1-1).2017.12.
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This study examines the relationship between corporate governance and capital structure employing data from the Athens Stock Exchange for the period 2005-2014. This period encompasses the sovereign debt crisis erupted in Greece at the end of 2009 and still continues to hit households and businesses alike. The results from the panel regression analysis signify the role of corporate governance structures in determining the capital structure of the Greek listed firms. In particular, the empirical results reveal a negative impact of board size on debt levels, which is weakened during the debt crisis period. In contrast, the presence of outside directors provides the appropriate certification to use more debt. Finally, growth opportunities and profitability are the two firm-specific factors which effect was weakened during the financially-constraint period.
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Bouraoui, Taoufik, and Ting Li. "The Impact Of Adjustment In Capital Structure In Mergers & Acquisitions On Us Acquirers Business Performance." Journal of Applied Business Research (JABR) 30, no. 1 (December 30, 2013): 27. http://dx.doi.org/10.19030/jabr.v30i1.8278.
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This paper examines the impact of adjustment in capital structure on 850 US acquirers business performance, within five years after mergers. We consider both leverage changes and adjustment in leverage deficit as our independent variables, and use Return On Equity (ROE) and Return On Assets (ROA) to measure post-merger performance. We find that leverage changes have a negative impact on performance, in both the short and long run after Mergers & Acquisitions (M&A), indicating that financial flexibility contributes to acquirers post-merger performance. The results also show that acquirers with movement toward target leverage ratio enjoy better performance after M&A, but the correlation is not significant in the long run. Therefore, high financial flexibility created by low leverage is more essential to acquirers facing costly and sophisticated post-merger integration, than target leverage ratio that minimizes financing cost immediately.
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Ainun, Moh Baqir. "PENGARUH KELOMPOK MANAJEMEN PUNCAK TERHADAP FINANCIAL DISTRESS : STUDI KASUS PADA PERUSAHAAN PERBANKAN DI INDONESIA." JURNAL AKUNTANSI DAN BISNIS : Jurnal Program Studi Akuntansi 5, no. 2 (November 29, 2019): 88. http://dx.doi.org/10.31289/jab.v5i2.2496.
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This study aims to identify the influence between top management related to financial distress. This study uses data of banking who listed on the Indonesia Stock Exchange in 2016. The data analysis technique in this research using multiple regression analysis method with the control variable; Return on Assets (ROA), Operational Costs to Operating Income (BOPO), Capital Adequacy Ratio (CAR), Loan to Deposit Ratio (LDR), and Cash Ratio (CR). The study discusses to support the stewardship theory that considers the top management group to have a mandate to the shareholders to manage the company and maintain the organization. However, the differences in the structure of the top management group will not affect their motivation to avoid financial stress. The results showed that the top management group had no significant effect on financial distress. This result is also shown the condition and structure of the top management group in the company still has the same goal which is to avoid financial distress.
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Lartey, Peter Yao, Santosh Rupa Jaladi, and Stephen Owusu Afriyie. "Theory of capital structure decision: Overview of the banking industry." Frontiers in Management and Business 3, no. 1 (2022): 167–77. http://dx.doi.org/10.25082/fmb.2022.01.003.
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The relevance of capital structure decision in the banking sector is documented in this paper. It contributes to existing literature in a review of previous empirical studies and fundamental theories of capital structure. The study underscored the factors influencing the choice of funding in connection with the market timing theories such as Pecking Order theory and the trade -of - theory. Our investigation suggest that, the choice of capital vary across sectors and industries on the basis of business risks, corporate governance, profitability, internal controls, and efficiency. The study observed that most empirical researchers universally endorsed asset structure, industry volatility, corporate taxes and firm growth as strong determinants of capital structure. The above issues may either improve the solvency position of a form or trigger major financial distress depending on the source of capital.
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Uchenna Okoye, Lawrence, Alexander Ehimare Omankhanlen, Johnson I. Okoh, Felix N. Ezeji, and Esther Ibileke. "Impact of corporate restructuring on the financial performance of commercial banks in Nigeria." Banks and Bank Systems 15, no. 1 (March 2, 2020): 42–50. http://dx.doi.org/10.21511/bbs.15(1).2020.05.
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The implementation of the 2004–2005 bank capital reform in Nigeria, introduced to deepen the financial capacity of the banking system, has led to a major restructuring of the banking sector. The reform required banks to increase their equity capital by about 1150 per cent (from two billion to twenty-five billion naira) within 18 months. Due to compliance challenges, the reform formed just twenty-five out of eighty-nine banks that previously existed. More than seventy-five per cent of the banks emerged through mergers and acquisitions. However, despite the massive increase in assets and deposit growth, episodes of bank distress have remained a recurring irritant in the country’s financial system. This study compares bank performance in the pre- and post-reform periods to determine the usefulness or efficacy of the capital reform in boosting bank performance based on panel analysis of data from five banks. The study covered the period 1996–2016. The generalized method of moments was used to evaluate the parameters of the model. The result of the random effects model shows a weak positive effect of total assets and deposit growth on bank performance in the pre-reform period. However, the post-reform assessment reveals that while profitability is significantly low in large-sized banks, it is higher in smaller banks. Given the above evidence, the study asserts that profit performance of banks is substantially linked to restructuring of the sector.
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Saba, Irum, Hafiz Muhammad Waqas Ashraf Ashraf, and Rehana Kouser. "Impact of Basel III framework on financial distress: A case study of Pakistan." Journal of Accounting and Finance in Emerging Economies 3, no. 1 (June 30, 2017): 1–20. http://dx.doi.org/10.26710/jafee.v3i1.198.
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Purpose: New liquidity rules phased under the Basel lll define the new stable funding ratios (NSFR) increase the stability of the funding structure of the financial institution. Using a Pakistani banking data, we tested the relevance of both Structural liquidity and Capital ratios as defined in the Basel lll. We used the broad definition of the failure and distress to check the status of the banking sector. If the banks fail, then it denoted by 1 otherwise 0. We use the logistic regression in our study. Estimate from several versions of the logistic probability model indicate that the likelihood of failure and distress decrease with increase liquidity holding while capital ratios are not significant. Our result provides support for the Basel lll that the NSFR has the inverse relation with the bank failure and distress. This study also compared the two versions of the NSFR. NSFR-10 and NSFR-14 are the two versions. Our analysis tells that the NSFR-14 is more reliable as compare to the NSFR-10. We also check the bank situations whether it lies in the failure and distress condition or in active banks. In this study we also check the other variables that have an important impact on the stability and failure and distress of the banks.
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Pazarskis, Michail, George Drogalas, Alkiviadis Karagiorgos, and Efthalia Tabouratzi. "Greek banking sector in the economic crisis and M&As as a solution." Corporate Board role duties and composition 15, no. 2 (2019): 37–44. http://dx.doi.org/10.22495/cbv15i2art4.
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This study examines the impact of thirteen mergers and acquisitions in the Greek banking sector which took place during the period of economic crisis: 2008-2014. More specifically, the sample of this study consists of all the mergers and acquisitions that led to the four remaining Greek banks (the acquirers of the above-mentioned transactions) which are: National Bank of Greece, Piraeus Bank, Eurobank and Alpha Bank. These specific banks were chosen due to the fact that after the M&As transactions we were able to compare their financial data. This comparison was made by using eight ratios for statistical tests one-year pre- and post-merger. The results of the study indicate statistically significant improvement in three capital structure and viability ratios, as well as a slight improvement on a liquidity ratio, while there is statistically insignificant change or no improvement on the profitability and efficiency ratios. In conclusion, there was some improvement in terms of capital adequacy and loan structure as far as the total capital employed of the merged institutions is concerned, but without improving the profitability of the banks during the economic crisis in Greece.