Preview

Abstracts Of 2 Articles Wanjing

Satisfactory Essays
Open Document
Open Document
471 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Abstracts Of 2 Articles Wanjing
Abstract 1:
This academic article is going to examine how the environment of institution has impact on the capital structure and choices of debt maturity structure made by corporations located in thirty nine countries including developed and developing countries. The results of the examination show that several factors in a countries clearly explain a significant portions of the difference in the leverage and the debt ratios indifferent countries, including a country’s legal and tax system, corruption, and the preferences of the capital suppliers. To be specific, those corporations located in countries with more corruption and in those countries with weaker law system are more likely to use more debts, especially using more short term debts. In addition, explicit bankruptcy codes and deposit insurance are closely associated with higher leverage and more long term debts. Corporation located in countries where there is a greater tax gain from leverage of debt will tend to use more debt in their capital structure because using tax will have tax benefits to the corporation thanks to that interest of debt is tax deductible.

Fan, J. P. H., Titman, S. & Twite, G. (2012) An International Comparison of Capital Structure and Debt Maturity Choices ebscohost.com [online]. Available at: http://eds.b.ebscohost.com/eds/pdfviewer/pdfviewer?sid=6b4cba5e-2ab3-40f7-85f3-45d993eaa591%40sessionmgr111&vid=6&hid=108 Accessed: 30 November 2014.

Abstract 2:
This academic article aims to examine the influence of specifically containing one kind of measurements of debt capacity when recently conducting tests of contesting different theories of capital structure. The main results of the examination are that regardless of concerning the limited debt capacity, if additional funds are required for reinvestment, debt seems to be more preferable than equity because of several advantages of using debts to finance the business, such as tax benefits. Although there are also some disadvantages

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Fins1613 Final Exam Notes

    • 398 Words
    • 2 Pages

    Financing Decisions: Capital Structure – the mixture of debt and equity maintained by a firm.…

    • 398 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Chapter 15 Mini Case

    • 1679 Words
    • 7 Pages

    The impact of capital structure on value depends on the effect that debt may have on…

    • 1679 Words
    • 7 Pages
    Good Essays
  • Best Essays

    Wrigley Case Study

    • 2282 Words
    • 10 Pages

    ‘Debt Capacity and Tests of Capital Structure theories’ (2010), Journal of Financial & Quantitative Analysis, 45, 5, pp. 1161-1187, Business Source Elite, EBSCOhost, viewed 21st August 2011.…

    • 2282 Words
    • 10 Pages
    Best Essays
  • Best Essays

    Financial Faith Integration

    • 3501 Words
    • 15 Pages

    References: Azarmi, T.. (2005). On corporate debt policy. Academy of Accounting and Financial Studies Journal, 9(1), 25-34, ISSN 1096-3685.…

    • 3501 Words
    • 15 Pages
    Best Essays
  • Powerful Essays

    According to Miller and Modigliani’s (1958) first proposition, the value of a firm is independent of its capital structure, assuming no corporate taxes. It was later demonstrated that the existence of debt in the capital structure creates a debt shield that increases the value of the firm by the present value of the tax shield (Miller & Modigliani, 1963). This line of reasoning implies that debt financing adds significant value to the firm and an optimal capital structure occurs with 100% debt. However, this is an unlikely outcome in reality with restrictions imposed by lending institutions, bankruptcy costs and the need for preserving financial flexibility implying that management will maintain a substantial reserve of borrowing power (Miller & Modigliani, 1963). These imperfections have since been discussed as additional factors when determining an optimal capital structure.…

    • 2215 Words
    • 10 Pages
    Powerful Essays
  • Best Essays

    Coke Financial Structure

    • 2217 Words
    • 9 Pages

    Kale, J. R., Noe, T. H., & Ramirez, G. G. (Dec., 1991). The Effect of Business Risk on Corporate Capital Structure: Theory and Evidence. The Journal of Finance , 1693-1715.…

    • 2217 Words
    • 9 Pages
    Best Essays
  • Powerful Essays

    The reason for analysing the capital structure of a business is to determine whether or not the proportion of debt to equity will allow a business to create wealth, without endangering the entity. There are many different ratios and techniques that can be used to analyse the capital structure of a business, and whether or not there are signs of financial distress, such as considering the debt-to-equity ratio, the current/quick ratio and gearing ratios.…

    • 2355 Words
    • 10 Pages
    Powerful Essays
  • Satisfactory Essays

    Swot Analysis Of Boeing

    • 126 Words
    • 1 Page

    Capital structure is study about managing overall operation and growth of firm by using different type of funds. As most of the public traded companies used debt and equity (which is stocks) methods to raise funds for firm and its operations, similarly Boeing also used both methods to raise funds. In table 1 – “Debt to equity calculation” talks about the amount of debt from short-term debt and long-term debt (mostly from bonds) and the total equity firm carries in last five years. In capital structuring the main question is how company manages its ratio of debt and equity effectively so that value of the firm is maximized with reasonable risk. There are advantages and disadvantage of being on any point of debt and equity…

    • 126 Words
    • 1 Page
    Satisfactory Essays
  • Powerful Essays

    Hatfield, G. B. (1994). The Determination of Optimal Capital Structure: The Effect of Firm and Industry Debt Ratios on Market Value. Journal of Financial and Strategic Decisions, Volume 7, Number 3.…

    • 1625 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    This assignment is in TWO parts, with each part carrying a maximum mark of 50%.…

    • 1425 Words
    • 10 Pages
    Powerful Essays
  • Best Essays

    The course project involved developing a great depth of knowledge in analyzing capital structure, theories behind it, and its risks and issues. Before I began this assignment, I knew nothing but a few things about capital structure from previous unit weeks; however, it was not until this course’s final project that came along with opening doors for me to developing a real understanding of why capital structure is important, what to expect from it, and how to evaluate in determining value of a firm. For the first time, various financial statements were closely examined and retrieved via online including Google, MSN, and Yahoo and an extensive amount of research were referred to in order to ensure quality in the project and report any findings that may be relevant to this research. One of the most stimulating part about this assignment was that we were allowed to select a firm of our interest and it was not until this project that I’ve came to suddenly realize there is plentiful amount of information available to enrich us to knowing more about how and why the values are placed about in a firm which convinced me enough to feel that this was the main reason why I selected this assignment to be included for my program portfolio.…

    • 2070 Words
    • 9 Pages
    Best Essays
  • Powerful Essays

    Capital structure refers to the mix of debt and equity which a firm uses to finance its operations. Many theories have been formulated with regard to whether there exists an optimal capital structure mix and the role the various determinants of capital structure play in deciding the mix. The Modern theory of capital structure began with Modigliani and Miller in 1958 (Harris and Raviv, 1991) where they proved that the choice between debt and equity financing has no material effects on the value of the firm or on the cost or availability of capital and they assumed perfect and frictionless capital markets. (Myers, 2001) There have been a lot of theoretical contributions to the Modigliani & Miller work.…

    • 6915 Words
    • 28 Pages
    Powerful Essays
  • Powerful Essays

    In the journal the author construct two hypothesis where H1: “The proportion of liquid asset invested liquid asset (cash and marketable securities) will be increasing in costs of financial debt” and H2: “The proportion of debt in the capital structure of a firm will be decreasing in its cost of financial distress”.…

    • 1251 Words
    • 6 Pages
    Powerful Essays
  • Satisfactory Essays

    key points

    • 383 Words
    • 2 Pages

    Key point – The type of debt obtained depends on the firm’s point in its life…

    • 383 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    capital structure

    • 551 Words
    • 2 Pages

    The context of this paper is to investigate the relationship between capital structure and firm performance on Malaysia plantations industries. According to Brealey and Myers (1988), the capital structure will determine the survival of a business. Damodaran (2001) defined capital structure as the mix of debt and equity used to finance the operation of firms. Capital structure is closed link with corporate performance (Tian and Zeitun, 2007). Corporate performance can be measured by variables which involve productivity, profitability, growth or, customers satisfaction. Companies often use debt when constructing their capital structure, which helps lower total financing cost and lower cost of debt financing. In general, using debt helps keep profits within a company and increases returns on equity for current company owners and helps secure tax savings.…

    • 551 Words
    • 2 Pages
    Good Essays

Related Topics