The main purpose of this study is to identify and describe the principal determinants of capital structure for Saudi Arabian firms, when the firms are classified as to their industry. Likewise, there are distinguishing features of Islamic finance that may well set it apart from conventional finance, and may possibly influence the decision of finance managers to adopt a particular level of debt capital over others. Specifically, Islamic finance does not permit the charging of interest or riba as creditors’ compensation for the use of borrowed funds. In the absence of interest cost, which is a fixed charge over a period of time, the financial leverage effect may not be as important a consideration in Sharia-compliant firms as it is in firms availing of conventional finance. Other than the effects of financial leverage, tax effects caused by borrowed funds may also be different without the recognition of interest as a tax-exempt cost, thereby modifying the basis of relied upon by management in making decisions about the level of debt it should avail of. ...
In the study, the independent variables identified were seven financial and economic firm indicators, while the dependent variable proxy for capital structure is the leverage or level of debt capital relative to the total capitalization of the firm. Multivariate regression modelling was employed in the assessment of which variables proved significant in determining capital structure, and in what direction it tended to influence the firm’s debt. The dissertation concludes that firm size is the most significant determinant across three of the five industrial sectors, followed by profitability which is a significant determinant for two sectors. Of the remaining, four factors were significant for one sector each. Manufacturing and industrial firms are significantly related to four determinants, the most of any other sector. Retail and services has two significant determinants, while the other three sectors have one each. Firm size relates to higher debt, while profitability relates to lower debt. Acknowledgements Table of Contents Abstract 2 Acknowledgements 4 Table of Contents 5 Chapter 1: Introduction 8 1.1Chapter overview 8 8 1.2 Background of the research problem 8 1.3 Research problem 10 1.4 Research objectives 10 1.6 Significance of the study 11 1.7 Scope and limitation 11 1.8 Chapter summary 11 Chapter 2: Literature Review 12 2.1 Chapter overview 12 2.2 Review of existing theories on capital structure policy determination. 12 2.3 Corporate control as a factor in capital structure determination 15 2.4 Evidence from different countries 16 2.5 Determinants of capital structure 20 2.6 Determinants of capital structure in Saudi Arabian companies 25 2.7 Chapter Summary 28 Chapter 3: Methodology 31 3.1 Chapter Overview 31 3.2 Research Design
Determinants of Capital Structure of Listed Saudi Arabian Companies Abstract The capital structure is the relative proportion of borrowed capital in comparison to equity capital. The importance in the financing is of importance because it has direct impact on capital…
In 2008 the world faced a financial meltdown. Globally the world faced major financial crisis and recession. The economic recession was a result of the US mortgage crisis. The subprime crisis of US caused ripple effect across the globe as a result most of the countries felt a financial crunch.
Considering the analysis and findings presented in the study, it is concluded that the usage of strategic planning tools improves organisational performance. In addition to this, the present study also concludes that there is a significant difference in the usage of strategic planning tools amongst high performing and low performing companies in Saudi Arabia.
The concept of corporate governance achieved acknowledgment since the 1980’s, when corporate organizations began exercising it as a benchmark ethical measure intended for accounting and financial reporting in addition to other fair practices. Formerly, corporate governance was defined as a standard collection of guidelines that is exercised to administer and implement control over corporate organisations.
The recent global financial crisis have brought to the fore issues and weaknesses in the international market for investments and securities, drawing concern to the financial health and operational continuity of potential equity investments. These concerns are exacerbated by the lack of transparency in the manner corporations operate, further undermining efforts to establish an international financial accounting standard and norms for the conduct of ethical business.
This paper represents a financial desertion on capital structure of public limited companies in United Kingdom at pre and post financial crisis. As, financial crisis in an economy or market has major impact on capital structure of each and every firms in the market which results a overall change in capital structure of that market.
This is pursuant to the Modigliani-Miller theory that a firm may seek to maximize profitability by resorting to a higher level of debt financing in order to take advantage of the tax deductibility of interest expenses in relation to this debt. The study gathered data from audited financial statements of ten manufacturing companies operating in Saudi Arabia and publicly listed in the exchange.
workshops/Blackboard) Dr Chin Bun Tse On Blackboard Title (max. 15 words) Note on Content: A title should summarise the main idea of the proposal simply and, if possible, with style. You may want to use a title and a subtitle, separated by a colon (e.g. ‘Brown Eggs: What they are Made of and How to Eat Them’) Capital Structure in the Cement Industry: Which industry characteristics determine how the companies are financed?
The capital structure of a firm is the relative proportion of borrowed capital in comparison to equity capital. The importance of investigating the implications of the level of debt in the financing of a firm’s operation is of importance because it has direct impact on the cost of capital of the company and therefore on the company’s bottom line.
Research Proposal: Influence of Working Capital Management on Profitability of Listed Manufacturing Companies of UK Table of Contents 1.Research Question 3 2.Aim and Objectives of the Research 3 3.Literature Review 4 3.1.Theoretical Background of Research 4 3.2.Review of Similar Studies 5 4.Proposed Research Method 6 4.1.Research Methodology 6 4.2.Data Collection and Data Analysis 8 4.3.Limitation of Research Method 8 Reference 9 1.
Theories of capital structure and also empirical studies on that have been analyzed trough out the paper to assess the reasons behind change in capital structure. This paper provides a clear understanding of the influence of financial crisis on corporate finance which leads to change in capital structure based on the financial environment of the market.
4 pages (1000 words)Dissertation
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