The effect of a change in capital structure on the risk and return of common stockholders is investigated. Also, the information content of dividends when a firm goes for new outside financing is examined. Data used in the study are collected from the Moody's Bond Survey, the Prentice Hall's Capital Adjustments, the Wall Street Journal Index, and the Center for Research in Security Prices Tape. The study uses an event study methodology. The risk (beta) of common stock before an issuance of debt securities is compared with the risk after the issue. The stock market reaction to the issuance of new debt securities is measured using after-the-event risk. The information content of dividend announcement before a new debt issue is compared to that of after the issue. The findings show that debt issue reduces stock holders' risk if the issuer is a dividend paying company. Also, debt securities issued through an exchange offer increase stockholders' wealth. Finally, issuance of new debt does not affect the information content of dividends.

Prudent usage of financial leverage by managers can significantly impact business operations and a corporate’s performance. Thus, the determination and the understanding of the influence of financial leverage on the profitability of a corporation are intrinsic and indispensable for not only maximising the value of a firm but also improving its financial performance. This study adopted a quantitative research method, in which the theories were tested by multiple regression analysis in line with the positivism paradigm and deductive measure. Moreover, ontology belongs to the objectivist perspective, in which the authors viewed reality as a mechanism from the outside and focused only on observable and measurable facts. The authors investigated the capital structure and profitability of the 18 largest listed real estate companies in Sweden from 2016 to 2020. Leverage essentially consists of total liability to assets, short-term liability to assets and long-term liability to assets. Profitability is defined as the rate of return on assets (ROA), which represents the company's degree of profitability relative to total assets from an overall business perspective widely used for financial analysts. In order to accomplish the trustworthy study in the regression model, control variables were also introduced that comprised company size, liquidity and solvency. The result of this paper reveals that financial leverage is irrelevant for determining ROA in the real estate industry in Sweden.

The diploma thesis focuses on the evaluation the financial situation of TWIN CAR, Ltd. in the years 2007 - 2010 using selected ratios of financial analysis. On the finding and evaluate the results according to various indicators of financial analysis will be drawn with concrete proposals and recommendations to improve the financial situation and the stability of the company in future years.

Research report submitted to partially fulfill the Master of Management in Finance and Investments to the Faculty of Commerce, Law and Management at the University of Witwatersrand March 2017 / This study empirically examines whether the capital structure for natural monopolies (parastatals) dynamically responds to macroeconomic conditions. It further examines whether the balance sheet channel theory holds for this industry sample. The study adopts a double sampling approach from the population of water boards in South Africa (SA), which raise their capital in open financial markets. A quantitative research approach is adopted with a descriptive design to achieve relevant deductions. Panel techniques are used in the descriptive design for the regressions. The study finds that leverage partly dynamically responds to macroeconomic conditions. Furthermore, the evidence shows that inflation is an exception that has no significant relationship with leverage. The balance sheet channel theory is found to hold for water boards that access capital in open financial markets. Specifically, empirical evidence shows that changes in the interest rate have a delayed impact on the companies’ characteristics, including capital structure. Overall, our evidence suggests that water boards in SA need to consider the benefits of linking financial policies to the business cycle and that their policies should consider the delayed effect of interest rate changes. / MT2017

Dai Yi. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2003. / Includes bibliographical references (leaves 79-82). / Abstracts in English and Chinese. / ABSTRACT --- p.i / ACKNOWLEDGEMENT --- p.iii / TABLE OF CONTENTS --- p.iv / LIST OF TABLES --- p.vi / CHAPTER / Chapter ONE --- INTRODUCTION --- p.1 / Background / Purpose / Summary of hypotheses and results / Organization / Chapter TWO --- REVIEW OF THEORIES AND LITERATURE --- p.5 / The Literature on ownership structure / Theoretical explanations for capital structure / The Literature on investment-cash flow sensitivities / Chapter summary / Chapter THREE --- DATA COLLECTION --- p.15 / Sample selection / Ownership and control definition / Patterns of the East Asian Firm Ownership / Country characteristic variables / Chapter summary / Chapter FOUR --- THE RELATIONSHIP BETWEEN OWNERSHIP STRUCTURES AND FIRM LEVERAGE --- p.23 / Rationale for the study / Hypothesis / Description of regression variables / The Heteroscedasticity problem and solution / Regression results / Accounting for country effects / Chapter summary / Chapter FIVE --- THE RELATIONSHIP BETWEEN OWNERSHIP STRUCTURES AND INVESTMENT-CASH FLOW SENSITIVITY --- p.42 / Theoretical framework / Hypothesis / Regression specification / Summary statistics / Empirical findings / Country characteristic control / Chapter summary / Chapter SIX --- CONCLUSION --- p.52 / TABLES --- p.54 / BIBLIOGRAPHY --- p.79

Research question- This thesis investigates the determinants of capital structure of the Swedish companies. In order to do so, the two dominant theories of the corporate structure are studied and their assumptions are tested. Thus, the study researches which one of the two theories is more appealing for the Swedish market. Methodology-The study follows a purely quantitative study, by conducting an econometric analysis. The data are collected from a secondary source and more particularly the "Retriever" database, which contains financial data of the Swedish companies. Findings- The findings indicate that the determinants of the corporate structure for the Swedish market do not differ from other studies which have been conducted in other countries. However, there is a difference when it comes to tax and non-tax shields. The results suggest that in most cases the Pecking Order Theory appears to be more representative for the Swedish market, since most of the coefficient appear to be in favour of it. Moreover, the significance of the effect of the industry for the financial leverage is confirmed.

This thesis examines the link between mergers and acquisitions (M&As) and corporate financial leverage. The thesis proposes and tests various hypotheses regarding: (1) the relationship between the probability of firms undertaking M&As and corporate financial leverage; and (2) the changes in financial leverage prior to firms' decision to initiate M&As. The empirical evidence on the proposed hypotheses is based on a large sample of firms in the UK during the period 1996 and 2006. The empirical analysis presented in this study contributes to the large and growing body of literature on the interdependence of corporate financing and investment decisions. Specifically, this study contributes to the literature in two ways. First, the thesis investigates the link between firms leverage deviations (i.e. the deviations of firms observed leverage ratios from target leverage ratios) and the probability of undertaking M&As in the future. Building upon the earlier literature, it is argued that extreme leverage deviations lower the probability of undertaking M&As by impairing firms ability to raise capital to finance these deals. The study s empirical analyses suggest that extremely overleveraged firms have lower probability of undertaking M&As. Moreover, the link between extreme overleverage and the probability of undertaking M&As is weaker for diversification-increasing acquisitions (i.e. deals in which the acquirer and the target firm operate in different industries); for domestic acquisitions (i.e. deals in which the acquirer and the target firm are domiciled in the same country); and for focused (i.e. single-segment) firms undertaking acquisitions. Thus, the leverage deviation effect is not symmetric for all types of acquisitions and for all firms. Second, the thesis examines how the pre-acquisition changes in corporate financial leverage may be influenced by: (1) the extent to which firms deviate from their target leverage ratios; and (2) firms intentions to initiate M&As. Key empirical findings in this section suggest that firms that have higher leverage deviations adjust their leverage at a higher rate than those with lower deviations. More importantly, the empirical evidence suggests that firms that undertake M&As adjust their pre-acquisition leverage at a higher rate than those that do not. These findings suggest that, when making adjustments to corporate capital structure, managers tend to consider their firms leverage deviations and their future acquisition plans. Furthermore, the study s findings partly explain the differences in the speeds of financial leverage adjustments reported in the existing literature.

Presented to the School of Accountancy University of the Witwatersrand, Johannesburg This research report is submitted to the faculty of Commerce, Law and Management in partial fulfilment of the requirements for the Degree of Master of Commerce (specialising in Taxation) Date: 31 March 2016 / This research focuses on large corporate transactions and acknowledges that they play a significant role in the allocation of resources in society. For this reason (1) the composition of firms’ capital structure and (2) how they choose to fund their investments are important. The South African income tax system has a bias towards debt and this bias (1) distorts the financing and investment decisions of firms; and (2) creates international tax arbitrage opportunities. These circumstances are not exclusive to South Africa. In order to address these distortions and loopholes the National Treasury and the SARS Commissioner have introduced complicated interest deduction limitations. This research critically analyses (1) the new adjusted tax rules concerning interest deduction limitations in finance transactions and (2) whether these new rules encourage investment. To assist with this critical analysis we use corporate finance theory to examine debt push-down transactions/structures because these structures are seen as highly tax-efficient for investors (both foreign and local). This research demonstrates that there are many different ways to finance a transaction but ultimately the choice of finance lies along the continuum between the issue of debt or equity. From an economic perspective this research confirms that there is no material reason for the disparate treatment between debt and equity. However from a legal perspective debt and equity instruments are materially distinct and thus tax considerations are influential in selecting the form of finance used in a transaction. This research not only concludes that leverage transactions utilising excessive debt pose a risk to tax revenues, tax sovereignty and tax fairness but also that the artificial statutory treatment of interest deductions on leverage transactions and working capital facilities means that (1) firms’ ability to finance their operations is reduced, (2) the value of firms is reduced and (3) the incentive for investors to invest in South Africa is also reduced. / MT2017

Darbo objektas – įmonių kapitalo struktūros formavimas ir jį įtakojantys veiksniai. Darbo tikslas – nustatyti kapitalo struktūros kitimo tendencijas ir jos formavimą įtakojančių veiksnių poveikį Lietuvos įmonėse. Darbo tikslui pasiekti keliami šie uždaviniai: • atskleisti kapitalo struktūros formavimo problemas; • nustatyti svarbiausius kapitalo struktūros formavimo teorinių tyrimų raidos pasaulyje ir Lietuvoje bruožus; • apibendrinti įvairių mokslininkų požiūrį į įmonės kapitalo struktūros formavimui įtaką darančius veiksnius bei jų poveikį įmonės finansiniam svertui. • sukurti tyrimų metodiką, leidžiančią įvertinti Lietuvos įmonių kapitalo struktūros formavimo sprendimus 2000-2006 m.; • nustatyti Lietuvos įmonių kapitalo struktūros kitimo tendencijas; • nustatyti veiksnius, sąlygojančius Lietuvos įmonių kapitalo struktūros formavimo sprendimus. Tyrimų metodika. Naudojant mokslinės literatūros analizės ir sintezės bei palyginimo metodus yra identifikuotos įmonių kapitalo struktūros formavimo problemos, nustatyti kapitalo struktūros formavimo teorinių tyrimų raidos bruožai Lietuvoje ir pasaulyje bei apibendrintas mokslininkų požiūris į įmonių kapitalo struktūros formavimą sąlygojančius veiksnius bei jų poveikį finansiniam svertui. Naudojant tyrimų metodologijos analizės ir lyginimo metodus yra sukurta tyrimų metodika, leidžianti įvertinti Lietuvos įmonių kapitalo struktūros formavimo sprendimus. Pasitelkiant matematinės statistikos funkcijų (TREND, LINEST), dispersinės... [toliau žr. visą tekstą] / The research object – formation of capital structure and factors that make influence on it. The research purpose is to investigate the trends of capital structure change, also find out the factors that influence on the formation of capital structure. The objectives of the research are: • to find out the problems of capital structure formation; • to present the main theories and models of capital structure, the directions of their development; • to clear up the researchers’ approach how the capital structure decision-making can be affected by relevant environmental influences or other factors; • to create the methodology of investigation of evaluation of capital structure formation decisions in Lithuanian companies during the period 2000-2006; • to investigate the change trends of capital structure formation in Lithuanian companies; • to determine the factors that make the influence on the capital structure decision-making in the companies. Research methodology. By using analysis, synthesis and comparison of foreign and Lithuanian scientific literature there are identified problems of enterprises capital structure formation, described the main points of theories and models of capital structure, also summarised the scientists’ approach to factors make influence on capital structure formation in the research. By using analysis and comparison methods of methodology there was created the research methodology in order to evaluate decisions of capital structure formation in... [to full text]

The dissertation thesis analyzes the debt burden on the prosperity of enterprise that operate in the territory of the Czech Republic, where the prosperity of the companies is expressed in equity capital profitability. The main aim is the empirical validation of the conclusions of financial leverage applied to the specific economic conditions of enterprises in the Czech Republic. The dissertation thesis is focused on the issue of the financial leverage on enterprises. First, the relation of return on equity and debt was evaluated Followed by an analysis of the relation of the debt ratio and a dynamic degree of financial leverage. Also a static degree of financial leverage with increasing debt was quantified. The operational objective was to assess a methodological diversity of quantification of static and dynamic model degrees of financial leverages. The validity of conclusions on the degree of financial leverage was assessed on the basic of the model simulating the impact of debt financing on earnings per share while changing the output (i.e., earnings before interest and taxes). The variance analysis of the return on equity indicator was performed using functional methods. The result was to quantify the effects of partial analytical indicators to the return on equity, the top-level indicator analyzed, mostly the influence of the dynamic degree of financial leverage indicators as a casual factor.