Firm Specific and Macroeconomic Determinants of Capital Structure: Evidence from Fragile Five Countries
This study is based on the non-financial companies within the fragile five countries (Turkey, Brazil, South Africa, India and Indonesia) during the period of 2004-2013. The factors affecting capital structure were assessed along with micro and macro variables for these countries. The micro variab...
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| Format: | Article |
| Language: | English |
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Ala-Too International University
2018-11-01
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| Series: | Eurasian Journal of Business and Economics |
| Subjects: | |
| Online Access: | http://www.ejbe.org/EJBE2018Vol11No22p059SAHIN.pdf |
| Summary: | This study is based on the non-financial companies within the fragile five countries
(Turkey, Brazil, South Africa, India and Indonesia) during the period of 2004-2013.
The factors affecting capital structure were assessed along with micro and macro
variables for these countries. The micro variables (firm specific) included in the
model were the debt taken in the previous year, firm size, growth, industry debt
average, and the tangibility and profitability ratio; GDP growth, inflation and
exchange rate change were included in the model as macroeconomic variables.
Also, the effects of financial crises were analyzed by treating pre- and post-2008
crisis periods separately. Panel data analysis techniques are used to identify the
relationships between these determinants and capital structure. The relationship
between the real effective exchange rate and the debt ratio was positive in the precrisis five-country model, but it turned negative in the post-crisis model. A
statistically significant relationship was discovered between the GDP growth rate
and the debt ratio only for Turkey for the full period (2004-2013) and for India for
the period between 2006 and 2013. On the other hand, a positive relationship was
found between the inflation rate and the debt ratio for the general (2004-2013) and
post-crisis models. |
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| ISSN: | 1694-5948 1694-5972 |