Abstract
References
- Arulvel., K., and Ajanthan., A. (2013). Capital Structure and Financial Performance: A Study Of Listed Trading Companies In Sri Lanka. ACADEMICIA, 3 (6), 1-13
- Baum, C.F., Schafer, D., and Talavera, O. (2006). The effects of short-term liabilities on profitability: a comparison of German and US firms. Boston College Working Papers in Economics 636, Boston College Department of Economics.
- Eriotis, N., Franguoli, Z., and Neokosmides, Z. (2002). Profit margin and capital structure: an empirical relationship. The Journal of Applied Business Research, 18 (2), 85-88.
- Evans, J. D. (1996). Straightforward statistics for the behavioral sciences. Pacific Grove, CA: Brooks/Cole Publishing.
- Fama, E., and French, K. (1998). Taxes, financing decisions, and firm value. Journal of Finance, 53 (3), 819-843.
- Filipovic, A.L., and Demirovic, S. (2016). The relationship between debt and profitability of stock companies in Montenegro. JCEBI, 3 (2), 19 - 34
- Goddard, J., Tavakoli, M., and Wilson, J. (2005). Determinants of profitability in European manufacturing and services: Evidence from a dynamic panel data. Applied Financial Economics, 15 (18), 1269-282.
- Joshua, A. (2005). “The effect of capital structure on profitability: an empirical analysis oflisted firms in Ghama”. Journal of Risk Finance, 6 (5), 438-445.
- Long, M., and Malitz, I. (1986). The investment financing Nexus: Some empirical evidence. Midland Corporate Finance Journal, 3, 53-59.
- Majumdar, S., and Chhibber, P. (1999). Capital structure and performance: Evidence from transition economy on an aspect of corporate governance. Public Choice, 98, 287-305.
- Mashavave, F., and Tsaurai, K. (2015). Capital Structure and Profitability. A Case Of Jse Listed Companies. Risk governance and control: financial markets and institutions, 5 (1), 81-93.
- Miller, M.H. (1977). Debt and tax. Journal of Finance, 32 (2), Papers and Proceedings of the Thirty-Fifth Annual Meeting of the American Finance Association, Atlantic City, New Jersey, 261-275.
- Mujahid, M., and Akhtar, K. (2014). Impact of Capital Structure on Firms Financial Performance and Shareholders Wealth: Textile Sector of Pakistan. International Journal of Learning and Development, 4 (2), 27-33.
- Ngobo, P.V., and Capiez, A. (2004). Structure du capital et performance de l’entreprise: le rôle modérateur des différences culturelles, Congrès de l’Association Internationale de Management Stratégique (AIMS), Le Havre.
- Pornsit, J., and Yixin, L. (2008). Capital structure, staggered Boards, and firm Value. Financial Analysts Journal, 64 (1), 49-60.
- Rahimian, M. (2016). The Relationship between Capital Structure and Profitability of Companies Listed in Tehran Stock Exchange. European Online Journal of Natural and Social Sciences, 5 (1), 128-131.
- Sarkar, S., and Zapatero, F. (2003). The Trade-off Model with Mean Reverting Earnings: Theory and Empirical Tests. Economic Journal, 113 (490), 834-860
- Walaa, W. E. (2007), Financial structure and firm value: empirical evidence from the United Arab Emirates. International Journal of Business Research, 7 (1).
- Zeitun, R., and Tian, G. (2007). Capital structure and corporate performance evidence from Jordan. Australasian Accounting Business and Finance Journal, 1 (4), 40-61
Abstract
Purpose - The paper aims to investigate the existence of a relationship between financial structure and performance for European listed companies.
Methodology - The reference period of the study is three years (2015-2017). In line with Modigliani and Miller’ Theory we assume that independent variable (debt/equity ratio) does not influence performance (measured by ROE and ROA). We use correlation and linear regression analysis.
Findings - Results show the existence of a weak relationship between capital structure expressed as debt/equity ratio and performance measures. However, the R2 of the model has a limited explanatory capacity, so only an insignificant part of the variability of performance measures can be explained by changes in capital structure. The remaining part depends on factors not included in the linear models formulated.
Conclusion- The study shows that the financial structure does not condition the economic and financial performance of European listed companies.
References
- Arulvel., K., and Ajanthan., A. (2013). Capital Structure and Financial Performance: A Study Of Listed Trading Companies In Sri Lanka. ACADEMICIA, 3 (6), 1-13
- Baum, C.F., Schafer, D., and Talavera, O. (2006). The effects of short-term liabilities on profitability: a comparison of German and US firms. Boston College Working Papers in Economics 636, Boston College Department of Economics.
- Eriotis, N., Franguoli, Z., and Neokosmides, Z. (2002). Profit margin and capital structure: an empirical relationship. The Journal of Applied Business Research, 18 (2), 85-88.
- Evans, J. D. (1996). Straightforward statistics for the behavioral sciences. Pacific Grove, CA: Brooks/Cole Publishing.
- Fama, E., and French, K. (1998). Taxes, financing decisions, and firm value. Journal of Finance, 53 (3), 819-843.
- Filipovic, A.L., and Demirovic, S. (2016). The relationship between debt and profitability of stock companies in Montenegro. JCEBI, 3 (2), 19 - 34
- Goddard, J., Tavakoli, M., and Wilson, J. (2005). Determinants of profitability in European manufacturing and services: Evidence from a dynamic panel data. Applied Financial Economics, 15 (18), 1269-282.
- Joshua, A. (2005). “The effect of capital structure on profitability: an empirical analysis oflisted firms in Ghama”. Journal of Risk Finance, 6 (5), 438-445.
- Long, M., and Malitz, I. (1986). The investment financing Nexus: Some empirical evidence. Midland Corporate Finance Journal, 3, 53-59.
- Majumdar, S., and Chhibber, P. (1999). Capital structure and performance: Evidence from transition economy on an aspect of corporate governance. Public Choice, 98, 287-305.
- Mashavave, F., and Tsaurai, K. (2015). Capital Structure and Profitability. A Case Of Jse Listed Companies. Risk governance and control: financial markets and institutions, 5 (1), 81-93.
- Miller, M.H. (1977). Debt and tax. Journal of Finance, 32 (2), Papers and Proceedings of the Thirty-Fifth Annual Meeting of the American Finance Association, Atlantic City, New Jersey, 261-275.
- Mujahid, M., and Akhtar, K. (2014). Impact of Capital Structure on Firms Financial Performance and Shareholders Wealth: Textile Sector of Pakistan. International Journal of Learning and Development, 4 (2), 27-33.
- Ngobo, P.V., and Capiez, A. (2004). Structure du capital et performance de l’entreprise: le rôle modérateur des différences culturelles, Congrès de l’Association Internationale de Management Stratégique (AIMS), Le Havre.
- Pornsit, J., and Yixin, L. (2008). Capital structure, staggered Boards, and firm Value. Financial Analysts Journal, 64 (1), 49-60.
- Rahimian, M. (2016). The Relationship between Capital Structure and Profitability of Companies Listed in Tehran Stock Exchange. European Online Journal of Natural and Social Sciences, 5 (1), 128-131.
- Sarkar, S., and Zapatero, F. (2003). The Trade-off Model with Mean Reverting Earnings: Theory and Empirical Tests. Economic Journal, 113 (490), 834-860
- Walaa, W. E. (2007), Financial structure and firm value: empirical evidence from the United Arab Emirates. International Journal of Business Research, 7 (1).
- Zeitun, R., and Tian, G. (2007). Capital structure and corporate performance evidence from Jordan. Australasian Accounting Business and Finance Journal, 1 (4), 40-61
Details
| Primary Language | English |
|---|---|
| Subjects | Finance, Business Administration |
| Journal Section | Articles |
| Authors | |
| Publication Date | December 30, 2019 |
| Published in Issue | Year 2019 Volume: 8 Issue: 4 |
Journal of Business, Economics and Finance (JBEF) is a scientific, academic, double blind peer-reviewed, quarterly and open-access journal. The publication language is English. The journal publishes four issues a year. The issuing months are March, June, September and December. The journal aims to provide a research source for all practitioners, policy makers and researchers working in the areas of business, economics and finance. The Editor of JBEF invites all manuscripts that that cover theoretical and/or applied researches on topics related to the interest areas of the Journal. JBEF charges no submission or publication fee.
Ethics
Policy - JBEF applies the standards of
Committee on Publication Ethics (COPE). JBEF is committed to the academic
community ensuring ethics and quality of manuscripts in publications.
Plagiarism is strictly forbidden and the manuscripts found to be plagiarized
will not be accepted or if published will be removed from the publication. Authors
must certify that their manuscripts are their original work. Plagiarism,
duplicate, data fabrication and redundant publications are forbidden. The
manuscripts are subject to plagiarism check by iThenticate or similar. All manuscript submissions must provide a similarity report (up to 15% excluding quotes, bibliography, abstract, method).
Open Access - All research articles published in PressAcademia Journals are fully open access; immediately freely available to read, download and share. Articles are published under the terms of a Creative Commons license which permits use, distribution and reproduction in any medium, provided the original work is properly cited. Open access is a property of individual works, not necessarily journals or publishers. Community standards, rather than copyright law, will continue to provide the mechanism for enforcement of proper attribution and responsible use of the published work, as they do now.