Leverage

DESCRIPTION Prior research finds a weak relation between cash-flow volatility and leverage. Using a novel measure of cash-flow volatility, we find that volatility matters more for firms that are financially constrained. Constrained firms issue debt when volatility is low, but have trouble deleveraging in response to increases in volatility. Constrained firms also hoard the proceeds from debt issues undertaken during low-volatility regimes, but invest the proceeds from debt issues when volatility is high. Overall, the observed relation between cash-flow volatility and capital structure choice is driven by financially constrained firms’ desire to ensure future financial flexibility.

This study seeks to explore the relationship between corporate governance and dividend payout policywith the mediating role of leverage.Relationship between corporate governance and dividend payout already established but mediating role of leverage is checked for the first time. Better corporate governance may impact the capital structure due to reduced agency problem and hence the firms change the dividend payout policy. CEO duality, audit committee, number of meetings, independent directors and board size are taken as indicators of corporate governance. The study uses the secondary data of Pakistan Stock Exchange 100 index listed companies from 2011 to 211. Total 327 firm-year observations are included in the study. AMOS is used to apply Structural Equation Modeling for the confirmation of mediation process. The empirical results show that leverage plays mediating role between corporate governance and dividend payout policy when CEO is not holding the office of ChairmanBoD and there is existence of audit committee. Board size is significantly and positively related with leverage and the leverage is significantly and negatively related with dividend payout ratio.

Il decreto milanese e` un esempio lampante della complessità delle situazioni di crisi aziendale e delle difficoltà per uscirne. La pronuncia affronta una serie di temi e giunge all’apertura della procedura di concordato preventivo di una società oggetto di un Leveraged Buy-Out e poi di due domande di (pre)concordato preventivo. I giudici ammettono la debitrice al concordato, senza prendere una chiara posizione sull’operazione di Leveraged Buy-Out e sull’incidenza di quello nell’avveramento della crisi, rimettendo sostanzialmente ogni valutazione ad un momento successivo e, con ciò , favorendo un approccio orientato all’interesse economico dei creditori. Il commento si sofferma criticamente sulle implicazioni della soluzione accolta per la protezione concreta dei creditori e sui margini di discrezionalita` concessi al debitore nella programmazione dell’uscita dalla situazione di crisi attraverso la continuazione dell’attivita` , riflettendo anche sull’abuso di preconcordato e sugli ...

In order to test the moderating role of corporate strategy and industry environment in the effect of liquidity on investment for Portuguese manufacturing firms, we developed a multiple linear regression model for panel data. It is a static model with three types of variables: financial; strategic/environmental; and interactive. The estimated model was validated through the Breusch-Pagan/Cook-Weisberg and Wald Modified tests (heteroscedasticity tests), Lagrange Multiplier (industry random effects test, using the two-digit National Classification of Economic Activities), Hausman robust test (fixed effects model vs. random effects model test) and likelihood-ratio test (joint effect of industry and time test). The statistical processing of the data revealed that a company’s strategy (diversification and innovation) and the industry environment (growth) moderate the effect of liquidity on investment, which can be explained by the effect of these factors on the cost of asymmetric informat...

The research work examined the impacts of internal control on financial performance in Nigeria airline industry. Airline was chosen due to the important role they play in increasing the level of fiscal activity. The aim and target of his research is to resolve whether internal control and its machineries has effect on the financial performance of Nigerian Airline Industry in checking fraud and fraudulent activities in the industry. The project was carried out by reviewing relevant journals, textbooks and literature on the topic. Questionnaires were used to elicit information. A total of 50 copies were distributed to individuals at the airports visited. The data gathered were analyzed using SPSS (Statistical Package for Sciences) to generate frequency percentages and also run the chi-square tests. The results of the empirical findings showed that internal control and its machineries has significant impacts on financial performance in airline industry. It is recommend that internal control should be undertaken with effective continuous monitoring of the controls and airline should be stricter with compliance to control procedure.

In this paper I study the relationship between aggregate money balances and subsequent stock and bond returns. I find that levels of broad money multipliers (the ratios of broad money to narrow money) forecast future returns with a negative sign, while changes in these multipliers forecast returns with a positive sign. These findings indicate that levels of multipliers are pro-cyclical: like the P/D ratio, they tend to be high at times of low expected returns. The dynamics of these multipliers may also indicate changes in the volume of financial intermediation and the level of net leverage, consistent with credit-cycle theories of macroeconomic fluctuations.

The financial instability hypothesis (FIH) was developed by Hyman Minsky in the 80s and early 90s but only gained strong popularity in light of the global financial crisis (GFC) of 2008. The hypothesis is essentially a claim that the financial systems of developed nations are fragile and unstable, where prolonged periods of economic booms will result in a collapse of the financial sector. Among proposals by others, Minsky continuously advocated for policies to deal with these conditions, however, such policies were largely ignored until recently. This essay will analyse and apply the FIH, examine policy recommendations to reduce financial fragility within the financial sector and also outline key shortcomings of Minsky’s hypothesis.

The purpose of this study is to examine the relationship between human capital and capital structure. Since several decades, capital structure has remained a puzzle. This study will further provide a logical explanation towards the factors affecting capital structure. Our analysis consists of 200 non-financial Pakistani companies listed on Karachi Stock Exchange over the period of 2011-2012. Capital structure has been tried to investigate with a different perspective by investigating the relationship between capital structure and human capital. It has been seen that there is a significant and positive relation between capital structure and human capital. Size, tangibility, growth and non-debt tax shield have positive relation with capital structure, whereas profitability has negative relation.To the best of authors’ knowledge, this is the first study that investigates the relationship between human capital and
capital structure in any developing economy by employing the data of non-financial Pakistani firms.

In their study “The cost of capital, corporation finance and the theory of investment” (1958) laureates of Nobel Price Nobel Franco Modigliani and Merton Miller represent what could possibly be the most important theory for the structure of capital, through which they explain the effect of the capital structure for the value of companies. Despite the hard work by Modigliani and Miller and the entire time spent by numerous scholars in developing concepts regarding this theory, we can say that it still remains unclear and faces many objections. This paper attempts to assess and make a critical review of Modigliani and Miller’s Theory and the dominating literature that is pro and against this theory, aiming to identify the theory’s importance and contribute to the field modern finances. To this end, the paper assessed and analyses Modigliani and Miller’s theorem by considering the original work of authors Modigliani and Miller (1958, 1961 and 1963) as well as the dominating literature that covers this theorem, by mirroring the firmest opinions from different authors either pro or against. This paper aims to present the implications of Modigliani and Miller’s Theory, its importance and theoretical contribution.

Healthcare infrastructures are a typical risky investment, which can be financed in many different and competing ways, and Public Private Partnership and project financing techniques are increasingly recognized as a useful and appropriate device. Risk identification, transfer, sharing and management are a key point of the whole structure and the risk matrix, used in order to classify and-wherever possible-measure risk is an unavoidable part of the investment package. To the extent that it can be professionally managed by specialized agents, risk sharing or transmission is not a zero sum game, even if risk pricing is never a trivial issue. While the public part traditionally bears core market risk (demand for health services), other key risks, such as those related to construction and management of commercial (hot) activities, are typically transferred to the private part, often represented by a private entity. A corporate finance perspective is crucial for preparing a proper business model, where economic and financial flows are projected along the time span of the investment, with managerial and strategic insights for not ephemeral sustainability. Capital structure issues, rotating around (optimal) leverage, are eventually discussed, starting from a Modigliani & Miller framework, with practical insights and sensitivity analyses.

The success of construction contractors largely depends on the specific terms and the availability of sufficient funds for realizing planned projects. Financial issues in construction have been discussed since mid 1970s, yet no consensus about progress has been reached in the construction finance literature. A systematic analysis of 259 finance related studies in construction is undertaken to identify research trends, critical topics, and performance of journals and authors. To map the productivity in construction finance field, Scopus database was searched for the entire period for which this database provides online coverage. Results reveal that “financial health” category, in particular one group of studies aiming to monitor and assess the financial performance of construction organizations for broader strategic issues pervaded the construction finance research. However, notably the “identification of capital structure, determinants and financing instruments” category received le...

Il decreto milanese e` un esempio lampante della complessità delle situazioni di crisi aziendale e delle difficoltà per uscirne. La pronuncia affronta una serie di temi e giunge all’apertura della procedura di concordato preventivo di una società oggetto di un Leveraged Buy-Out e poi di due domande di (pre)concordato preventivo. I giudici ammettono la debitrice al concordato, senza prendere una chiara posizione sull’operazione di Leveraged Buy-Out e sull’incidenza di quello nell’avveramento della crisi, rimettendo sostanzialmente ogni valutazione ad un momento successivo e, con ciò , favorendo un approccio orientato all’interesse economico dei creditori. Il commento si sofferma criticamente sulle implicazioni della soluzione accolta per la protezione concreta dei creditori e sui margini di discrezionalita` concessi al debitore nella programmazione dell’uscita dalla situazione di
crisi attraverso la continuazione dell’attivita` , riflettendo anche sull’abuso di preconcordato e sugli elementi di valutazione del possibile ricavo della futura liquidazione dei beni e dei diritti sui quali insistano privilegi destinati alla falcidia nell’ambito di un concordato ‘‘in continuità" ai sensi dell’art. 186 bis L. Fall.

This study aims to give an idea of corporate social responsibility disclosure in the Indonesian banking sector and to know that the financial performance affect the disclosure of corporate social responsibility (corporate social responsibility). The population in this study are all domestic banks operating in Indonesia 2007-2008 period, amounting to 226 banks.
Based on the results of tests performed by t test size and leverage variables have a significant effect on the variables of corporate social responsibility (CSR). Then through a t test showed that the ROA variable has no effect on corporate social responsibility (CSR). While based on simultaneous test (test F) Size, ROA, and Leverage has the effect of CSR in the Indonesian banking sector. The amount of R2 in banking in Indonesia amounted to 0.558. This indicates that the major effect of the independent variables are Size, ROA, and Leverage on CSR dependent variable that can be explained by this equation model of 55.8% while the remaining 44.2% is influenced by factors other than research.
Keywords: Size, ROA, Leverage, Corporate Social Responsibility

Kapital strukturu qərarları şirkətlərin maliyyələşmə faktorlarının müəyyən edilməsində əhəmiyyətli rol oynayır. Belə ki, bu göstərici həm səhmdarlar həm də menecerlər üçün gələcək perspektivlər və qarşıya qoyduğu məqsədlər üçün cari vəziyyətə görə  görüləcək işlərin proqnozlaşdırılmasında mühüm rola malikdir.  Azərbaycanda fəaliyyət göstərən şirkətlərin kapital strukturu ilə bağlı aparılmış bu tədqiqatda leverec əmsalı ilə şirkətin gəlirliliyi arasınakı əlaqə müəyyən edilməyə çalışılmışdır. Digər maliyyə sahələrindəki dəyişkənlərlə olan yaxın münasibətindən dolayı, kapital strukturu  bir şirkətin varlıqlarını maliyyələşdirərkən istifadə etdiyi borc və kapital birləşməsini əhatə etməkdədir. 
Tədqiqat zamanı kapital strukturu ilə bağlı nəzəriyyələri və leverec ilə gəlirlilik arasındakı əlaqə audit olunmuş maliyyə hesabatlarına əsasən  Azərbaycanda fəaliyyət göstərən şirkətlərdə 2015-2017-ci , banklarda isə 2014-2017-ci illər üzərinə analiz edilmişdir. Şirkətlərdə levereci ölçmək üçün  başqa bir leverec əmsalı olan asılı dəyişən kimi borcun kapitala nisbəti , əsas dəyişən kimi isə gəlirliliyi ölçmək üçün isə mənfəət marjası əmsalından istifadə edilib, banklarda isə  uyğun olaraq leverec və kapital gəlirliliyi əmsallarından istifadə edilmişdir. Asılı dəyişən zamanı istifadə etdiyim leverec əmsallarına bankların hesabatının açıqlama bölməsindəki qısa və uzunmüddətli borclar götürülmüş və istifadə olunmuşdur.  Kapital strukturunun gəlirliliyə təsiri panel metodu vasitəsi ilə analiz edilmiş və alınan nəticəyə görə asılı dəyişənlər (qısa müddətli və uzun müddətli borclar)  ilə gəlir arasında əlaqənin olduğu müəyyən edilmiş və bu əlaqəyə  görə şirkətlərdə leverec artması zamanı gəlirin azalması, banklarda isə bunun əksinin müşahidə olunduğunu görürük.

Despite a recent resurgence in research on the politics of migration, foreign policy analysts have yet to approach cross-border population mobility as a distinct field of inquiry. Particularly within the Global South, scant work has theorised the interplay between migration and interstate bargaining. This article proposes the framework of migration diplomacy to examine how mobility features in states' issue-linkage strategies, in both cooperative and coercive contexts. Drawing on Arabic, French and English primary sources, it empirically demonstrates the salience of its framework through an analysis of Libya's migration diplomacy towards its Arab, African and European neighbours under Muammar Gaddafi.

The objective of the study is to investigate the major determinants of Return on Equity as a measure of profitability in the airline industry using empirical financial data of world airlines.
The study design is a quantitative study based on Panel secondary data collected by theInternational Civil Aviation Organization (ICAO). All the available valid data collected by the ICAO was used for the study. Nonlinear regression model and one way ANOVA are employed for
data analysis. The results of the study indicate that there is a positive and significant relationship between Return on Equity and Net Profit Margin, efficiency and leverage for the profitable airlines. The relationship between ROE and efficiency becomes negative when the airlines are not profitable. The relationship between ROE and leverage is also negative when the airlines are not profitable. There is a significant difference in ROE, profit margin, and leverage between the
profitable and non-profitable airlines while there is no significant  difference in efficiency. There exists significant difference between airlines registered in the different regions of the world in terms of efficiency and profit margin. Even though, Airlines should focus on net profit margin to meet their objective of maximizing stockholder equity, airlines with negative profit margin should take action to lower both their efficiency and leverage to minimize their losses. Airlines with positive profit margins should maintain or improve their efficiency and leverage to maximize profitability ensuring that the positive profit margin is maintained or improved. However,leverage should only be increased to the optimum level to avoid excessive risk and interest expense that depletes profit margin.

Sport and politics have long been linked, but the Olympic Games represent the most political sports event of all. The following article focuses on two of the most important aspects of the Olympics (and sports ‘mega-events’ in general) that students of politics and international relations could make a major contribution towards: the use of the Olympics by states to showcase the host nation and the hoped-for ‘legacies’ that arise from them. Both aspects are, of course, interlinked: the ‘legacies’ are often put forward as the key rationale for the bidding for, and hosting of, the Olympics.

The  study  appraised  the  effect  of  firms’  characteristics  on  the  financial  performance  of  firms  in Nigeria using the oil and gas firms in Nigeria.  Sales growth and firms’ leverage are the proxies  for firms’ characteristics  while Return on Assets  was the measure for financial performance.  The study adopted the ex-post facto research design. Data were sourced from the financial statement of firms studied. Multiple regressions were used for analysis.  Results show that sales growth  and leverage
have significant a  negative and insignificant effect on Return on Assets. The paper recommends that firms  should  strive  to  enhance  firms’  sales  growth  at  a  level  that  will  positively  and  significantly affect  Return  on  Assets.  Leverage  level  should  be  managed  so  that  the  charges  do  not  erode  the returns made over the periods

To have an ideal mix of debt and equity in a balance sheet of an entity is till to date a very complicated issue for managers as there is no such rule to predict an optimal capital structure. An in-depth understanding is required for the corporate culture, the degree of the development of the capital market and the economy in which the firms operate. This study seeks to investigate the leverage composition of Pakistani corporations through their determinants. Fixed effect regression is used to show the relationship of determinants of capital structure on leverage corporations listed on Karachi Stock Exchange (KSE) for the period of 2006 to 2013. The results suggest that agency cost, growth, age, and size are significantly and negatively associated with the capital structure of Pakistan firms, however, collateral value of asset is significantly but positively associated with the capital structure of the firm. On the other hand, free cash flows, non debt tax shield, profitability, business risk and bankruptcy cost are not significantly associated with leverage composition of the firms and are against the signaling theory and peaking order theory. The key importance of this study is that no prior research was done for determinants like agency cost, free cash flows, bankruptcy cost and age as determinants of capital structure for Pakistani firms among other determinants. Further, this study does not confine to a particular sector rather it covers all companies listed by Karachi Stock Exchange.

A wide range of definitions exists of what constitutes value creation and -generation in private equity buyouts. At the core of the problem is that our understanding of the diverse set of levers, drivers and mechanisms by which financial value is generated has been inconsistent and incomplete. This paper attempts to address extant deficiencies in the literature by proposing a novel and cohesive conceptual model of value generation that connects various strands of research in the field.

Financial distress research of companies has attracted a growing attention in the recent past. This phenomenon of financial distress in public companies has been witnessed by a number of corporate failures and the increase in delisting of listed companies. Liquidity ratio gives rise to either leveraged firm or unleveraged firm. This study therefore attempts to fill the gap by investigating effectiveness of market ratios on financial distress of listed firms in Nairobi Security Exchange Market, Kenya. Theories such as the Liability Management Theory and the Shiftability Theory of Liquidity were reviewed which provides a foundation for both liquidity ratio and financial distress. The study used a cross-sectional study is an observational study. The target population will be 51 non-banking firms listed companies in Nairobi Security Exchange Market as indicated in from year 2011-2015. The entire population except the banking industry was used in the study. The study used document analysis by getting panel data from listed companies in Nairobi Security Exchange Market. Descriptive and inferential statistics method were used for data analysis and interpretation. Hypotheses were tested at 0.05 level of significance (95% confidence level) from OLS pooled least squares regression (fixed and random effect) which shows the relationship between the independent variable and dependent variable. The findings show that leverage ratio has a negative and significant effect on financial distress of firms listed on the NSE while liquidity analysis ratio had a positive and significant effect on financial distress