Modeling the impact of a debt load on efficiency of business entities
https://doi.org/10.34023/2313-6383-2016-0-9-17-29
Abstract
The objective of this article is to analyze efficiency of business entities. This research examines the impact of capital structure on financial effectiveness of firm which characterizes its ability to reach goals related to the maximization of profit and/or value of the company for shareholders. The research is based on the indicator «return on assets» (ROA) which is the most commonly used efficiency measure. With the use of the financial reporting data of economic entities of a number of Russian sectors of economy over the period from 2011 to 2014 several hypotheses about the impact of capital structure and some set of addition variables on financial effectiveness were tested by use of econometric modeling. Several models of panel data with various sets of independent variables were specified and estimated. Inflation data was also taken into the account. Also possible emergence of an endogeneity in data was considered for values of some indicators are formed simultaneously at the end of the reporting period. As a result, the authors obtained the quantitative characteristics reflecting degree of negative impact of a share of debt in total passive on the return on assets, and checked hypotheses of influence of the share of short-term and long-term debts on ROA. Distinctions on the scale of influence of branch accessory of assets on their profitability were also revealed.
About the Authors
Konstantin L. Polyakov
National Research University - Higher School of Economics
Russian Federation
Russian Federation
Marina V. Polyakova
National Research University - Higher School of Economics
Russian Federation
Russian Federation
Stepan V. Samoylenko
Russian Federation
References
1. Колеников С.О. Прикладной эконометрический анализ в статистическом пакете Stata: в 2 ч. Часть II. М.: Российская экономическая школа, 2001. 46 с.
2. Магнус Я.Р., Катышев П.К., Пересецкий А.А. Эконометрика. Начальный курс: учеб. 5-е изд., испр. М.: Дело, 2001. 400 с.
3. Abdel Shahid S. Does ownership structure affect firm value? Evidence from the Egyptian stock market. Working paper. January 2003. URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=378580 (дата обращения: 01.09.2016).
4. Achabal D., McIntyre S., Heineke J. Issues and perspectives on retail productivity // Journal of Retailing. 1984. Vol. 60. Iss. 3. P. 107-127.
5. Akeem L.B., Terer E.K., Kiyanjui M.W., Kayode A.M. Effects of capital structure on firm’s performance: Empirical study of manufacturing companies in Nigeria // Journal of Finance and Investment Analysis. 2014. Vol. 3. No. 4. P. 39-57.
6. Akyuz G.A., Erkan T.E. Supply chain performance measurement: A literature review // International Journal of Production Research. 2010. Vol. 48. No. 17. P. 5137-5155.
7. Al-Matari E.M., Al-Swidi A.K., Fadzil F.H.B. The measurements of firm performance’s dimensions // Asian Journal of Finance and Accounting. 2014. Vol. 6. No. 1. P. 24-49.
8. Ang J.S., Cole R.A., Lin J.W. Agency costs and ownership structure // Journal of Finance. 2000. Vol. 55. Iss. 1. P. 81-106.
9. Balestra P., Varadharajan-Krishnakumar J. Full information estimations of a system of simultaneous equations with error component structure // Econometric Theory. 1987. Vol. 3. Iss. 2. P. 223-246.
10. Baltagi B.H. Econometric analysis of panel data. 4th ed. NY: Wiley, 2008.
11. Chakravarthy B.S. Measuring strategic performance // Strategic Management Journal. 1986. Vol. 7. Iss. 5. P. 437-458.
12. Chou S.R., Lee C.H. The research on the effects on capital structure on firm performance and evidence from the non-financial industry of Taiwan 50 and Taiwan Mid-Cap 100 from 1987 to 2007. The 2008 International Conference on Business and Information (BAI 2008). Seoul, July 07-09 2008.
13. Chowdhury A., Chowdhury S.P. Impact of capital structure on firm’s value: Evidence from Bangladesh // Business and Economic Horizons. 2010. Vol. 3. Iss. 3. P. 111-122.
14. Demsetz H., Lehn K. The structure of corporate ownership: Causes and consequences // Journal of Political Economy. 1985. Vol. 93. No. 6. P. 1155-1177.
15. Fynes B., Voss C., De Burca S. The impact of supply chain relationship quality on quality performance // International Journal of Production Economics. 2005. Vol. 96. Iss. 3. P. 339-354.
16. Gleason K.C., Mathur L.K., Mathur I. The interrelationship between culture, capital structure, and performance: Evidence from European retailers // Journal of Business Research. 2000. Vol. 50. P. 185-191.
17. Gorton G., Rosen R. Corporate control, portfolio choice, and the decline of banking // Journal of Finance. 1995. Vol. 50. Iss. 5. P. 1377-1420.
18. Gunasekaran A., Patel C., Tirtiroglu E. Performance measures and metrics in a supply chain environment // International Journal of Operations and Production Management. 2001. Vol. 21. Iss. 1/2. P. 71-87.
19. Hagel III J., Brown, J.S., Davison L. The best way to measure company performance // Harvard Business Review. March 4, 2004. URL: https://hbr.org/2010/03/the-best-way-to-measure-compan.html (дата обращения: 01.09.2016).
20. Hoffer Ch.W., Sandberg W.R. Improving new venture performance: Some guidelines for success // American Journal of Small Business. 1987. Vol. 12. Iss. 1. P. 11-25.
21. Hofstede G. Culture’s consequences: International differences in work related values. Beverly Hills, CA: Sage Publications. 1980.
22. Hutchinson M., Gul F.A. Investment opportunity set, corporate governance practices, and firm performance // Journal of Corporate Finance. 2004. Vol. 10. Iss. 4. P 595-614.
23. Kayo E.K., Kimura H. Hierarchical determinants of capital structure // Journal of Banking and Finance. 2011. Vol. 35. Iss. 2. P. 358-371.
24. Laugen B.T., Acur N., Boer H., et al. Best manufacturing practices - What do the best-performing companies do? // International Journal of Operations and Production Management. 2005. Vol. 25. No. 2. P. 131-150.
25. Margaritis D., Psillaki M. Capital structure, equity ownership and firm performance // Journal of Banking and Finance. 2010. Vol. 34. Iss. 3. P. 621-632.
26. Mashayekhi B., Bazaz M.S. Corporate governance and firm performance in Iran // Journal of Contemporary Accounting and Economics. 2008. Vol. 4. Iss. 2. P 156-172.
27. McConnell J.J., Servaes H. Additional evidence on equity ownership and corporate value // Journal of Financial Economics. 1990. Vol. 27. P. 595-612.
28. Mehran H. Executive compensation structure, ownership, and firm performance // Journal of Financial Economics. 1995. Vol. 38. Iss. 2. P. 163-184.
29. Morck R., Shleifer A., Vishny R.W. Management ownership and market valuation: An empirical analysis // Journal of Financial Economics. 1988. Vol. 20. P. 293-315.
30. Muritala T.A., Ajibola O.B. Does capital structure enhance firm performance? Evidence from Nigeria // The IUP Journal of Accounting Research and Audit Practices. 2013. Vol. XII. Iss. 4. P. 43-55.
31. Neely A., Gregory M., Platts K. Performance measurement system design: A literature review and research agenda // International Journal of Operations and Production Management. 1995. Vol. 15. Iss. 4. P. 80-116.
32. Nuryanah S., Islam S.M.N. Corporate governance and performance: Evidence from an emerging market // Malaysian Accounting Review. 2011. Vol. 10. No. 1. P 17-42.
33. Perry S.C. The relationship between written business plans and the failure of small businesses in the US // Journal of Small Business Management. 2001. Vol. 39. Iss. 3. P. 201-208.
34. Rao N.V., Al-Yahyaee K.H.M., Syed L.A.M. Capital structure and financial performance: evidence from Oman // Indian Journal of Economics and Business. 2007. Vol. 6. Iss. 1. P. 1-23.
35. Richard P.J., Devinney T.M., Yip G.S., et al. Measuring organizational performance: Towards methodological best practice // Journal of Management. 2009. Vol. 35. No. 3. P. 718-804.
36. Roden D.M., Lewellen W.G. Corporate capital structure decisions: Evidence from leveraged buyouts // Financial Management. 1995. Vol. 24. Iss. 2. P. 76-87.
37. Rue L.W., Ibrahim N.A. The relationship between planning sophistication and performance in small business // Journal of Small Business Management. 1998. Vol. 36. Iss. 4. P. 24-32.
38. San O.T., Heng T.B. Capital structure and corporate performance of Malaysian construction sector // International Journal of Humanities and Social Science. 2011. Vol. 1. No. 2. P. 28-36.
39. Shyam-Sunder L., Myers S.C. Testing static tradeoff against pecking order models of capital structure // Journal of Financial Economics. 1999. Vol. 51. P. 219-244.
40. Tudose M.B. Capital structure and firmperformance // Economy Transdisciplinary Cognition. 2012. Vol. 15. Iss. 2. P. 76-82.
41. Zeitun G.G., Tian R. Capital structure and corporate performance: Evidence from Jordan // Australasian Accounting, Business and Finance Journal. 2007. Vol. 1. Iss. 4. P. 40-64.
Review
For citations:
Polyakov K.L., Polyakova M.V., Samoylenko S.V. Modeling the impact of a debt load on efficiency of business entities. Voprosy statistiki. 2016;(9):17-29. (In Russ.) https://doi.org/10.34023/2313-6383-2016-0-9-17-29
Views:
412
Email this article 