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The comparison of capital structure across industry in UK
Finance & Accounting
Pages 40 (10040 words)
The comparison of capital structure across industries in the United Kingdom Acknowledgements My teachers, my parents and my friends have all contributed in this research through their dedicated guidance and support. I acknowledge their efforts and pay my special regards to my course professor.
This research work aims at reviewing the literature and identifying the factors which determine the capital structure of firms, and then empirically investigating the relationship between leverage and factors influencing it in different industries in the United Kingdom, which include basic materials sector, financial services sector, customer services sector, consumer goods sector and real estate sector. In this regard, the researcher has made use of secondary sources of information to collect information required for analysis and has conducted descriptive and statistical analysis. The results obtained do not exactly match with the findings form the literatures. OLS method is used to test four hypotheses based on the factors affecting leverage ratio or debt-to-equity ratio using 40 companies from each of five sectors. Only in case of basic materials sector the model is significant and we find a significant relationship of leverage ratio with free cash flow and tax benefits. Again for financial services sector tax benefits is significantly associated with leverage but other variables are not. Amongst the control variables (tax benefits and growth rate) only tax benefits is inversely related in case of basic materials and directly related in case of financial services. ...
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