• The Journal of Asian Finance, Economics and Business
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• v.6 no.2
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• pp.15-24
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• 2019

This study analyzes the effect of the capital structure of Korean manufacturing firms on default risk based on Moody's KMV option pricing model where the probability of default is obtained by measuring the distance to default as a covariant in logit model developed by Merton (1974). Based on the panel data of manufacturing firms, this study achieves its primary objective, using a fixed effect regression model and examines the effect of a firm's capital structure on default risk amongst publicly listed firms on Korea exchange during 2005-2016. Empirical results obtained suggest that the rise in short-term debt to assets leads to increase the risk of default whereas the increase in long-term debt to assets leads to decrease the default risk. The benefits of short-term debt financing over a short-term period fade out in the presence of information asymmetry. However, long-term debt financing overcomes the information asymmetry and enjoys the paybacks of tax advantage associated with long-term debt. Additionally, size, tangibility and interest coverage ratio are also the important determinants of default risk. Findings support the trade-off theory of capital structure and recommend the optimal use of long-term debt in a firm's capital structure.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.7
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• pp.73-84
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• 2020

Existing studies disagree over the core predictors of firm-level financial choices in developing countries. The general practice only validates the traditional capital structure model, which leads to inconsistency and a lack of novelty. This study removed overfitting issues among existing factors and presented the most reliable and advanced capital structure model in Pakistani firms. The panel data include 368 Pakistani companies from 19 non-financial sectors over the period 2004 to 2017. We apply Akaike and Bayesian Information Criteria to remove overfitting issues among inconsistent proxies in the capital structure model. The fixed effects regression is used for basic results and the Generalized Method of Moments is applied to control the endogeneity. Besides the conventional proxies, we report that credit rating, distance from bankruptcy, managerial concentration, and institutional quality are the most advanced capital structure determinants in Pakistan. These predictors remain significant across firm size and growth levels. Also, the findings confirm that new predictors are reliable to define capital structure dynamics and improve the speed of adjustment in overall and sub-sample analysis. The major findings suggest that managers and policymakers should consider these advanced predictors to design their financial settings in firms.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.4
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• pp.239-250
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• 2022

This study examined the level of capital structure and its determinants of publicly traded companies in Malaysia before and after the COVID-19 pandemic. The data for this study was examined using Python Programming Language and time-series financial data from 2,784 quarterly observations in 2019 and 2020. The maximum debt is larger before the COVID-19 period, according to the findings. During the COVID-19 period, short-term debts and total debts have both decreased slightly. However, long-term debts have increased marginally. As a result, this research demonstrates that the capital structure has changed slightly during the COVID-19 period. The findings imply that independent of the capital structure proxies, tangibility, liquidity, and business size had an impact on capital structure in both periods. It was found that profitability had a significant impact on total debts both before and after the COVID-19 crisis. While higher-profit enterprises appear to have lesser short-term debts before the COVID-19 periods, they are also more likely to have lower long-term debts during the COVID-19 periods. Even though growing companies tend to have higher short-term debts and thus total debts during those periods, longterm debts are unaffected by potential growth.

• Industry Promotion Research
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• v.5 no.3
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• pp.31-36
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• 2020

This study explores the determinants of capital structure of the hospitality industry such as hotels, lodging industry and tourism industry using financial data from 2000 to 2019. Several explanatory variables suggested by related theories and past studies were regressed with the dependent variable, debt ratio for the entire sample period, pre-crisis period and post-crisis period and the regression coefficients of the sales expenses, profitability and firm size were found to be statistically significantly negative. Especially the sign of the coefficient of the firm size was opposite to that of the manufacturing industry, which implies the uniqueness of the hospitality industry.

• Management & Information Systems Review
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• v.11
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• pp.91-109
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• 2002

This study provides evidence on the determinants of variability in corporate ETRs(effective x rates). Specially, this study examined the association between ETRs, firm size, and variables proxying for firms' capital structure and asset mixes, while controlling for firms' profitability. Overall, results suggest that ETRs are associated with many firm-specific characteristics such as size, capital structure, asset mix, and profitability, and that some of these associations continued after Corporate Tax Law changes. In addition, although the results indicate that the association between ETRs and firm-specific characteristics have undergone a shift since tax law change, these firm-specific characteristics have continued to be associated with ETRs.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.10
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• pp.183-192
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• 2020

The purpose of this paper is to investigate the determinants of the Operational Self-Sustainability (OSS) of Vietnamese microfinance institutions (MFIs). This research uses both qualitative and quantitative research methods: (i) qualitative research was via in-depth interviews with ten microfinance practitioners, policymakers and researchers; (ii) quantitative research was conducted by using panel data of 34 MFIs in the period 2011-2015 with binary logistics and OLS regressions. Results are as follows: (i) MFIs' OSS in Vietnam are mainly determined by five key factors: portfolio at risk (PAR>30), capital structure, gross loan portfolio, scope of activities and legal form; (ii) OSS are most affected by legal status (social organizations have better OSS than formal MFIs or programs/projects), location (MFIs focus in one province have higher OSS than working nationwide or just in one district), capital structure (MFIs with more equity proportion have higher OSS); (iii) surprisingly, average loan size per borrower and age of MFIs do not have statistically significant correlation with OSS. The key recommendations are: (i) MFIs should focus on its professionality and increase its equity; (ii) related stakeholders such as State Bank of Vietnam should promote the enabling ecosystem for microfinance development to enhance poverty reduction and economic development.

• Korea Journal of Hospital Management
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• v.11 no.2
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• pp.61-86
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• 2006

Based on a previous literature about hospital capital structure(Shyam- Sunder & Myers, 1999), this study attempted comparison and analysis on whether the forecast of trade-off and pecking order theory could be validated in hospital's capital structure. First, this study analyzed whether hospitals follow the priority for each capital source as suggested by pecking order theory under lack of capital running in hospital. Next, it analyzed whether debt level is regressed on the average to target debt level so as to verify the validity of trade-off theory. Finally, it also analyzed possible associations between debt level and determinants of capital structure as adopted in static trade-off theory, so as to verify relative advantages of these two theories about hospital capital structure. The analysis over whole period showed that both trade-off theory and pecking order theory isn't supported particularly. This mean that each hospital's financing behaviors is different and that has not dominant financing behaviors. In the midst of separation of dispensary from medical practice, medical institutions in Korea first finances funds required using retained earnings and then use liabilities. however pecking order theory is supported, the preference of long-term liabilities and short-term liabilities is not clear. In addition, considering that debt level is in no average regression to target debt ratio, it is found that hospital capital structure following trade-off theory turns into that subject to pecking order theory via the separation of dispensary from medical practice.

• Journal of Korea Technology Innovation Society
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• v.10 no.3
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• pp.431-457
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• 2007

The main purpose of this study is to analyze the determinants of innovation in the medium core firms that belong to components and materials industry. For this purpose, we introduce the Schumpeterian hypothesis as a theoretical background at first. According to the Schumpeterian hypothesis, large firms in concentrated markets are likely to have more innovative activities. That means, firm site and market structure are the main determinant of innovation. Then, we propose other economic factors that have been considered to have effects on firms' innovative activities in previous studies. Those factors are export, profit, growth rate, R&D expenditure and capital intensity. In order to analyze the determinants of innovation, we estimate whether firm size, market structure, export, profit, growth rate, R&D expenditure and capital intensity affect to the possibility of creating innovation in medium core firms. In order to do this, our study uses survey data from 'Korean Innovation Survey(2005)' conducted by STEPI as well as utilizes the probit model as an analytical method. According to the empirical results, firm size has a positive relationship with innovative activities of medium core firms but market concentration does not. We find the negative correlation between market concentration and innovative activities in this study. Thus, was have to say that we do not fully support the Schumpeterian hypothesis in this case. Among other variables, profit and R&D expenditure are estimated to have positive relationship with innovative activities, while export and capital intensity are estimated to have negative relationship with innovative activities. In case of growth rate, we do not find any significant relationship with innovative activities. In conclusion, larger firm size, higher market competition, more access to the financial market and additional R&D investment would facilitate innovative activities of medium core firms. However, we have to review the relationship between export and innovative activities that has been estimated in this study. While the estimated effect of export on innovative activities can be explained by the own characteristics of medium core firms that produce and supply capital goods to final manufacturer, we have address this issue in the future.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.11
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• pp.769-778
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• 2020

The purpose of this study was to examine the role of profitability as a mediating variable in influencing firm value. This study uses a sample of manufacturing companies listed on the Indonesia Stock Exchange from 2016 to 2018. The data used is panel data, with data analysis using multiple regression. Based on the Sobel test, profitability plays a role in mediating the effect of firm size on firm value. The effect of firm size on firm value is indirect, however, through profitability. Therefore, the market price of the shares of large-scale companies will increase if the resulting profitability is high. The capital structure and managerial ownership directly influence firm value. The results showed that managerial ownership and firm size had a positive effect on profitability, while capital structure had no effect on profitability. Capital structure and managerial ownership have a negative effect on firm value, while firm size and profitability have a positive effect on firm value. The main finding of this study is that profitability acts as an intervening variable in mediating the relationship between firm size and firm value.

• The Journal of the Korea Contents Association
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• v.12 no.4
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• pp.401-406
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• 2012

Shanghai Stock Exchange is the largest stock exchange of emerging markets that there were listed firms 905, listed securities 1,537, listed stocks 949, total number of listed stocks 2 trillion 2000 billion shares. There is more development that is expected to occur in the future. The purpose of this study is to find determinants of capital structure to listed manufacturing firms in Shanghai Stock Exchange using multiple regression. Conclusions of this study are summarized as follows. First, firm size is positively related to debt ratio significantly at 1% significance level.. Second, the profitability is negatively related to debt ratio significantly at 1% significance level. Third, the growth ability is positively related to debt ratio significantly at 1% significance level. fourth, cash flow, the largest shares ownership, negotiable shares ratio are negatively related to debt ratio but they are not significant statistically. The result of this study provides information for investors and can be utilized to improvement of financial structure.