Capital Structure Choice of Bangladeshi Firms: An Empirical Investigation

Khairul Alom

30 citations0/0 files storedAsian Journal of Finance & Accounting

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Corporate Finance and Governance Financial Analysis and Corporate Governance Working Capital and Financial Performance

Abstract

This study endeavors to investigate the impact of firm specific factors on capital structure decision for a sample of 44-firm listed on Dhaka Stock Exchange (DSE) during the period of 2004-2011. To achieve the objectives, this study tests a null hypothesis that none of the firm’s specific factors such as, liquidity, market to book, collateral, dividend payment, profitability, size and industry classification has significant impact on leverage using estimate of fixed effect model under Ordinary Least Square (OLS) regression. Checking multicollinearity and estimating regression analysis through Pearson correlation model respectively this study found that profitability, collateral and liquidity have significant and negative impact on leverage. Positive and significant impact of market to book value ratio on leverage has been found in this study. On the other hand, dividend payment and size were not found as significant explanatory variables of leverage. Results also expose that total debts to total assets ratios are significantly different across Bangladeshi industries.

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References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1988Prospect theory: An analysis of decision under risk 1984Corporate financing and investment decisions when firms have information that investors do not have 2021Econometric Analysis of Panel Data 1958The Cost of Capital, Corporation Finance and the Theory of Investment 2008The cost of capital, corporation finance and the theory of investment 1984The Capital Structure Puzzle 1995What Do We Know about Capital Structure? Some Evidence from International Data

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