Variables that sway the capital structure! Evidence from the US automotive industry
AbstractThe choice of capital structure (capst) has significant implications for a firm’s financial performance and value. It is always a challenge for the firms to make the right decision on the capst proportion. The study identifies the firm variables that sway the capst decisions of the US automo...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2024-12-01
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| Series: | Cogent Social Sciences |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/23311886.2023.2293309 |
| _version_ | 1797394926639513600 |
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| author | Suzan Dsouza Krishnamoorthy K Umar Nawaz Kayani Hassan Nasseredine |
| author_facet | Suzan Dsouza Krishnamoorthy K Umar Nawaz Kayani Hassan Nasseredine |
| author_sort | Suzan Dsouza |
| collection | DOAJ |
| description | AbstractThe choice of capital structure (capst) has significant implications for a firm’s financial performance and value. It is always a challenge for the firms to make the right decision on the capst proportion. The study identifies the firm variables that sway the capst decisions of the US automotive industry. In this study, we utilize unbalanced panel data from 86 firms for the period 2011–2022 making up a total of 670 firm/year observations. The dependent variable is the firm’s capital structure proxied by total debt ratio, long-term debt ratio, and short-term debt ratio, while the independent variables are sales growth, firm size, profitability of firm, and tangibility ratio. Through a quantitative approach and panel regression, the study concluded that profitability of firm has a negative and significant impact on both total debt ratio and short-term debt, while sales growth, firm size, and tangibility ratio have no significant impact on any of the debt variables representing capital structure. These findings provide insights into the financial practices of the US automotive industry sample and can support future decision-making in the industry. These insights can inform decision-making related to capst choices, financial risk management, and strategic planning for automotive industry firms. |
| first_indexed | 2024-03-09T00:26:51Z |
| format | Article |
| id | doaj.art-f3406f108e4f4b43bf3466f176578ce4 |
| institution | Directory Open Access Journal |
| issn | 2331-1886 |
| language | English |
| last_indexed | 2024-03-09T00:26:51Z |
| publishDate | 2024-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Social Sciences |
| spelling | doaj.art-f3406f108e4f4b43bf3466f176578ce42023-12-12T04:10:32ZengTaylor & Francis GroupCogent Social Sciences2331-18862024-12-0110110.1080/23311886.2023.2293309Variables that sway the capital structure! Evidence from the US automotive industrySuzan Dsouza0Krishnamoorthy K1Umar Nawaz Kayani2Hassan Nasseredine3Accounting Department, College of Business Administration, American University of the Middle East, Egaila, KuwaitDepartment of Management studies, KIT – Kalaignarkarunanidhi Institute of Technology, Coimbatore, Tamilnadu, IndiaCollege of Business, Al Ain University, Abu Dhabi, United Arab EmiratesAccounting Department, College of Business Administration, American University of the Middle East, Egaila, KuwaitAbstractThe choice of capital structure (capst) has significant implications for a firm’s financial performance and value. It is always a challenge for the firms to make the right decision on the capst proportion. The study identifies the firm variables that sway the capst decisions of the US automotive industry. In this study, we utilize unbalanced panel data from 86 firms for the period 2011–2022 making up a total of 670 firm/year observations. The dependent variable is the firm’s capital structure proxied by total debt ratio, long-term debt ratio, and short-term debt ratio, while the independent variables are sales growth, firm size, profitability of firm, and tangibility ratio. Through a quantitative approach and panel regression, the study concluded that profitability of firm has a negative and significant impact on both total debt ratio and short-term debt, while sales growth, firm size, and tangibility ratio have no significant impact on any of the debt variables representing capital structure. These findings provide insights into the financial practices of the US automotive industry sample and can support future decision-making in the industry. These insights can inform decision-making related to capst choices, financial risk management, and strategic planning for automotive industry firms.https://www.tandfonline.com/doi/10.1080/23311886.2023.2293309US automotive industrycapital structure decisionstotal debt ratioshort-term debt ratiolong-term debt ratiopanel data study |
| spellingShingle | Suzan Dsouza Krishnamoorthy K Umar Nawaz Kayani Hassan Nasseredine Variables that sway the capital structure! Evidence from the US automotive industry Cogent Social Sciences US automotive industry capital structure decisions total debt ratio short-term debt ratio long-term debt ratio panel data study |
| title | Variables that sway the capital structure! Evidence from the US automotive industry |
| title_full | Variables that sway the capital structure! Evidence from the US automotive industry |
| title_fullStr | Variables that sway the capital structure! Evidence from the US automotive industry |
| title_full_unstemmed | Variables that sway the capital structure! Evidence from the US automotive industry |
| title_short | Variables that sway the capital structure! Evidence from the US automotive industry |
| title_sort | variables that sway the capital structure evidence from the us automotive industry |
| topic | US automotive industry capital structure decisions total debt ratio short-term debt ratio long-term debt ratio panel data study |
| url | https://www.tandfonline.com/doi/10.1080/23311886.2023.2293309 |
| work_keys_str_mv | AT suzandsouza variablesthatswaythecapitalstructureevidencefromtheusautomotiveindustry AT krishnamoorthyk variablesthatswaythecapitalstructureevidencefromtheusautomotiveindustry AT umarnawazkayani variablesthatswaythecapitalstructureevidencefromtheusautomotiveindustry AT hassannasseredine variablesthatswaythecapitalstructureevidencefromtheusautomotiveindustry |