Theoretical approaches in assessment of the impact of the capital structure on performance efficiency of corporations
https://doi.org/10.35854/1998-1627-2022-5-471-478
Abstract
Aim. The work aimed to reveal the relationship between the structure of capital and the performance efficiency of corporations.
Tasks. The work was performed to generalize and systematize approaches to determining the content of the capital structure of corporations; as well as substantiate the relationship between the structure of capital and the performance efficiency of corporations.
Methods. The author, using general scientific methods (analysis, synthesis, generalization), studied the results of empirical studies aimed at assessing the relationship between the capital structure and the performance efficiency of corporations.
Results. It was concluded that under conditions close to reality, decisions on the choice of sources of financing and the establishment of a proportion between them have a significant impact on the performance efficiency of corporations. The direction, strength, and form of relationship depend on the chosen approach to determining the content of the capital structure and the characteristics of efficiency used in the study.
Conclusions. The process of formation and management of the capital structure is an integral part of the financial management system. The level of financial stability of the corporation depends on the competence extent the sources of financing are chosen and the capital structure is formed. By regulating the capital structure, management team has the opportunity to increase the financial efficiency of the corporation, including the profitability of operations and investment activity.
About the Author
G. A. Nekrasova
Pitirim Sorokin Syktyvkar State University
Russian Federation
Russian Federation
Galina A. Nekrasova, Senior Lecturer at the Department of Finance Management of Institute of Economics and Management
55 Oktyabrskiy Ave., Syktyvkar 167001
SPIN-code: 2780-1103
References
1. Van Horne J.C., Wachowicz J.M., Jr. Fundamentals of financial management. Englewood Cliffs, NJ: Prentice-Hall; 2005. 719 p.
2. Bykova A.A., Molodchik M.A., Shamilova E.G. Ownership concentration, corporate governance development and firm performance in Russian listed companies. Prikladnaya ekonometrika = Applied Econometrics. 2017;(1):50-74. (In Russ.).
3. Nikitushkina I.V., Makarova S.G., eds. Corporation capital structure: Theory and practice. Moscow: Economics Faculty of Moscow State University; 2013. 125 p. (In Russ.).
4. Pöyry S., Maury B. Influential ownership and capital structure. Managerial and Decision Economics. 2010;31(5):311-324. DOI: 10.1002/mde.1477
5. Chen L., Zhao X. On the relation between the market-to-book ratio, growth opportunity, and leverage ratio. Finance Research Letters. 2006;3(4):253-266. DOI: 10.1016/j.frl.2006.06.003
6. Dimitrov V., Jain P. The value relevance of changes in financial leverage. SSRN Electronic Journal. 2006. DOI: 10.2139/ssrn.708281
7. McConnell J.J., Servaes H. Equity ownership and two faces of debt. Journal of Financial Economics. 1995;39(1):131-157. DOI: 10.1016/0304-405X(95)00824-X
8. Shamshur A. Is the stability of leverage ratios determined by the stability of the economy? SSRN Electronic Journal. 2009. DOI: 10.2139/ssrn.1502827
9. Francis B., Hasan I., Sharma Z. Leverage and growth: Effect of stock options. Journal of Economics and Business. 2011;63(6):558-581. DOI: 10.1016/j.jeconbus.2011.04.003
10. Ahn S., Denis D.J., Denis D.K. Leverage and investment in diversified firms. Journal of Financial Economics. 2006;79(2):317-337. DOI: 10.1016/j.jfineco.2005.03.002
11. Ibhagui O.W., Olokoyo F.O. Leverage and firm performance: New evidence on the role of firm size. The North American Journal of Economics and Finance. 2018;45:57-82. DOI: 10.1016/j.najef.2018.02.002
12. Ramadan Z., Ramadan I. Capital structure and firm performance of Jordanian manufacturing sector. International Journal of Economics and Finance. 2015;7(6):279-284. DOI: 10.5539/ijef.v7n6p279
13. Rajan R.G., Zingales L. What do we know about capital structure? Some evidence from international data. The Journal of Finance. 1995;50(5):1421-1460. DOI: 10.1111/j.1540-6261.1995.tb05184.x
14. Margaritis D., Psillaki M. Capital structure, equity ownership and firm performance. Journal of Banking & Finance. 2010;34(3):621-632. DOI: 10.1016/j.jbankfin.2009.08.023
15. Ivashkovskaya I.V., Stepanova A.N., Kokoreva M.S. Financial architecture of Russian corporations: An empirical analysis. Moscow: Infra-M; 2013. 279 p. (In Russ.).
16. Iavorskyi M. The impact of capital structure on firm performance: Evidence from Ukraine. Master’s thesis. Kyiv: Kyiv School of Economics; 2013. 36 p. URL: http://www.kse.org.ua/download.php?downloadid=306 (accessed on 29.04.2022).
Review
For citations:
Nekrasova G.A. Theoretical approaches in assessment of the impact of the capital structure on performance efficiency of corporations. Economics and Management. 2022;28(5):471-478. (In Russ.) https://doi.org/10.35854/1998-1627-2022-5-471-478
Views:
330
