Abstract
The factors affecting the firm’s value been the subject of considerable studies for both academics and professionals, especially how capital structure decision affects firm value in what way and to what extent. However, the overall effect of leverage on firm’s value is still a debatable issue and there is no certainty about it. This research aims to examine the impact of capital structure decision on firm value for firms listed on American stock exchanges and included within S&P 500 index, in addition to examining determinants of leverage. Furthermore, the research tested empirically the influence of leverage structure on firm value given different growth and size opportunities of firms included in sample. The sample included …show more content…
For example, a positive relationship were reported by some studies like (Rathinasamy et al. (2000), Dalbor et al. (2007), Cheng and Tzeng (2011), Altan and Arkan (2011), Sudivat et al.(2012), Ogbulu and Emeni (2012)), while other studies reported a negative relationship (Rayan (2008), (Aggarwal and Zhao (2007), Aggarwal et al. (2011)). On the other hand, other studies reported a positive correlation for firms with low–growth and negative correlation for firms with high-growth (Chen (2002), Alonso at el. (2005),McConnel and Servaes …show more content…
Stulz (1988), Aggarwal and Kyaw (2006) argues that debt can have a positive and negative effect on firm value through the optimal debt structure selection by balancing the agency costs and other debt associated costs against benefits obtained of debt financing to the firm as a whole. While Jensen (1986), Myers (1993) and Stulz (1988) claimed that the debt can have a positive or negative effect on the firm value which is depended on the firm’s future investment opportunities. This existence of such relationship, we used to build our hypotheses
The factors affecting the firm’s value been the subject of considerable studies for both academics and professionals, especially how capital structure decision affects firm value in what way and to what extent. However, the overall effect of leverage on firm’s value is still a debatable issue and there is no certainty about it. This research aims to examine the impact of capital structure decision on firm value for firms listed on American stock exchanges and included within S&P 500 index, in addition to examining determinants of leverage. Furthermore, the research tested empirically the influence of leverage structure on firm value given different growth and size opportunities of firms included in sample. The sample included …show more content…
For example, a positive relationship were reported by some studies like (Rathinasamy et al. (2000), Dalbor et al. (2007), Cheng and Tzeng (2011), Altan and Arkan (2011), Sudivat et al.(2012), Ogbulu and Emeni (2012)), while other studies reported a negative relationship (Rayan (2008), (Aggarwal and Zhao (2007), Aggarwal et al. (2011)). On the other hand, other studies reported a positive correlation for firms with low–growth and negative correlation for firms with high-growth (Chen (2002), Alonso at el. (2005),McConnel and Servaes …show more content…
Stulz (1988), Aggarwal and Kyaw (2006) argues that debt can have a positive and negative effect on firm value through the optimal debt structure selection by balancing the agency costs and other debt associated costs against benefits obtained of debt financing to the firm as a whole. While Jensen (1986), Myers (1993) and Stulz (1988) claimed that the debt can have a positive or negative effect on the firm value which is depended on the firm’s future investment opportunities. This existence of such relationship, we used to build our hypotheses