|
UPSI Digital Repository (UDRep)
|
|
|
|
||||||||||||||||||||||||||||
| Abstract : Perpustakaan Tuanku Bainun |
| This paper investigates the interaction between capital structure and firm competition on the performance of firms in Nigeria. The study uses two distinct measures of competition, the Herfindahl-Hirschman Index (HHI) and Boone indicator (BI), the impact of competition on leverage-performance relationship is examined. A panel of 63 Nigerian listed firms over the period 2001-2010 is used for the empirical analysis.The results indicate that financial leverage, used as a measure of capital structure, has significant positive effect on firm performance. It also reveals that product market competition in Nigeria enhances the performance effect of leverage.
Keywords Leverage, performance, Boone indicator, Herfindahl-Hirschman indicator |
| References |
Abhion, P, Braun, M and Fedderke, J. (2006). Competition and productivity growth in South Africa CID Working Paper No. 132, August.
Altman, E. I. (1984). A further empirical investigation of the Bankruptcy Cost Question. The Journal of Finance. Vol 39, No 4, 1067-1089. September.
Anderson, T. W. and Hsao, C. (1982). Estimation of dynamic models with error components. Journal of the American Statistical Association, 78, 598-606.
Baltagi, B. H. (2001). Econometrics analysis of panel data. 2nd Edition. West Sussex, U.K. John Wiley & Sons.
Bhagat, S., & Bolton, B. (2008). Corporate governance and firm performance. Journal of Corporate Finance, 14, 257–273.
Bhattacharya P. S. And Graham, M. A. (2009). On institutional ownership and firms’ performance: A Disaggregated View. Journal of Multinational Financial Management, 19. 370 – 394
Bolton, P., andScharfstein, D. S. (1990). A theory of predation based on agency problems in financial contracting. American Economic Review, 80, 93–106.
Boone, J. (2008). A new way to measure competition. Economic Journal, 118, 1245–1261.
Brander, J. A., and Lewis, T. R. (1986). Oligopoly and financial structure: The limited liability effect. The American Economic Review, 76, 956–970.
Campello, M. (2003). Capital structure and product markets interactions: Evidence from business cycles. Journal of Financial Economics, 68, 353–378.
Champion, D. (1999). Finance: The joy of leverage. Harvard Business Review, 77: 19-22.
Chevalier, J. A. (1995a). Capital structure and product-market competition: Empirical evidence from the supermarket industry. The American Economic Review, 85, 415– 435.
Dasgupta, S., and Titman, S. (1998). Pricing strategy and financial policy. The Review of Financial Studies, 11, 705–737.
Edwards, J. (1987). Recent developments in the theory of corporate finance Oxford Review of Economic Policy Vol. 3, N0. 4. Winter. Pp. 1-12.
Fama, E. F., and Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 26, 301–325.
Fosu, S. (2013). Capital structure, product market competition and firm performance: Evidence from South Africa. The Quarterly Review of Economics and Finance, 53, 140- 151.
Ghosh, S. (2008). Leverage, foreign borrowing and corporate performance: Firm level evidence for India. Applied Economic Letters, 15, 607–616.
Grossman, S. J., and Hart, O.D. (1983). Corporate financial structure and managerial incentives. National Bureau of Economic Research, Working Paper No. R0398.
Harris, M. and Raviv, A. (1991). Capital structure and the informational role of debt. Journal of Finance, 45, 321–349.
Hart, O. (1983). The market mechanism as an incentive scheme. Bell Journal of Economics, 14, 366–382.
Hausman J. A. and Taylor, W. E. (1981). Panel data and unobservable individual effects. Econometrica, 49 (6) 1377-1398.
Jensen, M. and Meckling, W. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3, 305–360.
King, M. R., and Santor, E. (2008). Family values: Ownership structure, performance and capital structure of Canadian firms. Journal of Banking & Finance, 32, 2423–2432.
Kovenock, D. and Phillips, G. (1997). Capital structure and product market behaviour: An examination of plant exit and investment decisions. The Review of Financial Studies, 10, 767–803.
Lyandres, E. (2006). Capital structure and interactions among firms in output markets: Theory and evidence”, Journal of Business, Vol. 79, pp. 2381 - 2421.
MacKay, P. and Phillips, G. (2005). How does industry affect firm financial structure. Review of Financial Studies, Vol. 18, pp.1433-1466.
Marsh, P. (1982). The choice between equity and debt: An empirical study. Journal of Finance 37, 121-144.Maury, B. (2006). Corporate performance, corporate governance and top executive turnover in Finland. European Financial Management, 12, 221–248
Modigliani, F., and Miller, M. (1958). The cost of capital, corporation finance and theory of investment. American Economic Review, 48, 261–297.
Myers, S. C. (1977). The determinants of corporate borrowing. Journal of Financial Economics, 5, 147–175.
Naha, S. and Roy M. (2011). Product market competition and capital structure of firms: The Indian evidence. Journal of Quantitative Economics, Vol. 9 No. 2, July.
Ogebe, P., Ogebe, J. & Alewi, K. (2013). The impact of capital structure on firms’ performance in Nigeria. MPRA Paper No. 4617. Available Online at http://mpra. ub.uni-muenchen.de/46173/
Opler, T. C., and Titman, S. (1994). Financial distress and corporate performance. The Journal of Finance, 49, 1015–1040.
Pathak, R. (2011). Capital structure and performance: Evidence from Indian manufacturing firms”. Available at SSRN: http://ssrn.com/abstract=1740424 Accessed September, 2013.
Rajan, R.G., and Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. Journal of Finance, 50, 1421Ð1460.
Roberts, S. (2004). The role for competition policy in economic development: The South African experience. Development Southern Africa, 21, 227–243.
Titman, S., and Wessels, R. (1988). The determinants of capital structure choice. Journal of Finance, 43, 1-19.
Villalonga, B., and Amit, R. (2006). How do family ownership, control and management affect firm value? Journal of Financial Economics, 80, 385–417.
|
| This material may be protected under Copyright Act which governs the making of photocopies or reproductions of copyrighted materials. You may use the digitized material for private study, scholarship, or research. |