2.2 Trade-off Theory According to Murray and Vidhan (2007), trade-off theory is a solution to balance marginal costs and marginal benefits. From their survey, there are two definition to explain this theory. Firstly, a firm is said to establish the static trade-off theory if the firm’s leverage is determined by a single period trade-off between the tax benefits of debt and the deadweight costs of bankruptcy. Second, a firm is said to exhibit target adjustment behavior if the firm has a target level
THE DETERMINANTS OF CAPITAL STRUCTURE OF NIGERIAN BUSINESS FIRMS: A PANEL DATA STUDY Oba Efayena INTRODUCTION Capital structure decision is one of the most important decisions facing the financial manager. It is one of the most researched fields in corporate finance. However most of the researches on capital structure were carried out in the developed countries but with very
MODIGLIANI AND MILLERS THEORIES AND ITS WEAKNESS Arnold (2013) stated that financial economists Modigliani and Millers created a simplified model for capital structure decision by making some assumptions in 1958 (pp.830). The assumptions are that there is no taxation, perfect capital markets with perfect information available to all economic agents and no transaction costs, no costs of financial distress and liquidation, firms can be classified into distinct risk classes and individuals can borrow
Critical review of the Gearing Theory 3.1 Traditional Gearing theory Skare (2002) stated in his research that the traditional gearing theory excludes the short-term financing from the cost of capital calculation which the firm’s capital structure can be viewed as a required rate of return that must be earned on an investment leaving the firm’s value unaffected which supported the traditional gearing theory. Afrasiabishani (2012) also supported the traditional theory by stating that traditional approach
Yazdanfar and Öhman (2015) propose that age category has a principal role in defining differences in capital structures of firms by effecting the utilization of financing sources and SMEs depend financially on internal equity and short term debt at the beginning of their life cycle. As the firm grows, the share of long term debt also rises, but not significant to be influential. Moreover, if SMEs capital is exhausted and internal finance are not sufficient, external finance is needed but in form of
CHAPTER 1: INTRODUCTION The main objective of this study is to investigate the impact of capital structure and other variable that influence the performance of Government Linked Companies which are listed on Bursa Malaysia. This chapter intends to introduce the background of study, problem statement, objectives of the research, research question, hypothesis, significance of study, scope of study and limitation of the study. 1.1 BACKGROUND OF STUDY The performance of the company is measured by its
Economic Development in Thailand from 1945 to 1997: Perspective of Labour-Intensive Industrialization 1. Introduction Despite being one of the biggest exporters of some agricultural products such as like rubber and rice, present-days Thailand is the industrial-driven economy. According to the World Bank’s statistics (2015), during 2010-2014, Thailand’s manufacturing sector contributed around 36-40 percent to total GDP (Gross Domestic Products), while Thai agricultural sector possessed about 10 percent
II. Theory and Literature review 2.1 Review of important previous studies of cash holding issue Cash holding is an important financial and strategical issue for a corporation and also one of the hot issues of foreign and domestic academic researches. The concern for the cash holding issue could date back to the Keynesian theory of the demand for money. This theory is mainly focused on the demand for money from the perspective of macro economy. The theories and empirical studies of cash holding issue
industrial hemp crop, self-sustaining, and off-limit to private automobiles. However, as every one knows a utopia city does not actually exist due to factors like politics, the economy, people’s beliefs, and all sort of other issues. Although, the aspects of the utopia city mentions above are not actually impossible, all three of the ideas were based on real world examples. The realization that a city could possibly implement ideas, that were once theories and imagination, is fascinating. In spite
According from the macroeconomics books, theories and policies the Tenth edition by Richard T.Froyen (2012) explained that inflation is a rise in the general level of prices. Based from the Investopedia, inflation is the rate at which general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Inflation is a rise in consumer prices, increasing the cost of living. Some inflation is caused because a country has printed too much money or experienced tremendous