Capital Structure Of The Textile, Plastics And Electronics Industries

848 Words Aug 28th, 2016 4 Pages
Yeh & Roca (2010) investigated the influence of macroeconomic variables and their relation with firm-specific variables to determine the capital structure of the textile, plastics and electronics industries in Taiwan. They found that macroeconomic factors have significant positive impact on growth opportunities but the results become reversed when macroeconomic conditions worsen. Stephan & Talavera (2004) analyzed the relationship between optimal debt and macroeconomic volatility and their study revealed that when macroeconomic variability like inflation increases firms reduce the use of optimal level of debt. Gulati & Zantout (1997) and Bas et al., (2009) also reported that inflation rate inversely affects leverage decision of a firm. They found an inverse relationship between money growth and the level of debt. It is rational because money growth influences interest rate which has an impact on the cost of debt.

Çekrezi (2013) analyzed the influence of firm-specific and macroeconomic variables on capital structure decision using a sample of 53 non-listed firms over the period of 2008-2011. The study claimed that some firm-specific variables like tangibility, liquidity, and size have significant positive relationship with leverage while profitability has significant negative relationship with leverage which supports the POT of leverage. On the other hand, macroeconomic variable like GDP growth has a significant positive relationship with leverage. GDP growth rate is found…

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