Determinants of Capital Structure for Listed Companies in the Colombian Industrial Sector
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Abstract
The purpose of this study was to determine the relationship between tangibility, corporate taxes, age, and company size to the capital structure of Colombian firms. Thirty five (35) companies of the industrial sector listed by the Colombian Stock Exchange were chosen as the sample for this study. Financial data used in the analysis was collected from their public annual reports. A Pearson correlation coefficient was used to analyze the linear dependence between leverage (firm’s capital structure) and the independent variables (tangibility, corporate tax rate, age, and company size). The results indicate that tangibility, corporate tax rate, and age of companies don’t have a significant relationship with the leverage of the company. But, there exists a significant positive correlation between the size of the company and its capital structure which is consistent with the trade-off theory of capital structure.
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Research Articles
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References
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Chen, L., & Chen, S. (2011). How the pecking-order theory explain capital structure. Journal of International Management Studies, 6(2), 1-9. Retrieved from http://search.proquest.com/docview/896547247?accountid=39909
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Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review,76(2), 323. Retrieved from http://search.proquest.com/docview/233040216?accountid=39909
Jensen, M. C, & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3: 305-360.
Khan, Z. S. (2010). Determinants of Capital Structure: Case of Listed Paint Manufacturing Companies. Interdisciplinary Journal of Contemporary Research in Business, 2(6), 253-271. Retrieved from http://search.proquest.com/docview/815405577?accountid=39909
Kraus, A. (1973). A State-Preference Model of Optimal Financial Leverage. The Journal of Finance, 28(4), 911. Retrieved from http://search.proquest.com/docview/194699725?accountid=39909
Martínez, J., & López, E. (2007). Los ciclos de la inversión y su financiamiento en colombia. Borradores de Economía , 438.
Torres, O. (2011). Panel Data Analysis, Fixed & Random Effects. Princeton: Princeton.
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Modigliani, F., & Miller, M. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review, 48: 261-297.
Myers, S.C., & Majluf, N.S. (2002). Corporate Financing and Investment Decisions. When Firms Have Information the Investors Do Not Have (Working Paper No. 1396). Retrieved from National Bureau of Economic Research website: http://www.nber.org/papers/w1396
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Ping, L., & Caixia, H. (2011). To what extent capital structure decision can affect a listed company's total market value. Management Science and Engineering, 5(4), 45-49. Retrieved from http://search.proquest.com/docview/1021200804?accountid=39909
Riaz, F., & Afzal, M. (2011). Financial factors in capital structure decisions: Panel data analysis of pakistan's major manufacturing sectors. Interdisciplinary Journal of Contemporary Research in Business, 3(1), 310-326. Retrieved from http://search.proquest.com/docview/882911258?accountid=39909
Saylgan, G., Karabacak, H., & Küçükkocaoglu, G. (2006). The firm-specific determinants of corporate capital structure: Evidence from turkish panel data. Investment Management and Financial Innovations, 3, 125-139. Retrieved from http://search.proquest.com/docview/1282829636?accountid=39909
Tenjo, F., López, E., & Zamudio, N. (2006). Determinates de la estructura de capital de las empresas colombianas (1996-2002). Borradores de Economía , 380. Tenjo, F.
Umer, U. M. (2014). Determinants of capital structure: Empirical evidence from large taxpayer share companies in ethiopia.International Journal of Economics and Finance, 6(1), 53-65. Retrieved from http://search.proquest.com/docview/1500938167?accountid=39909
Veal, A. J. (2005). Business Research Methods: A Managerial Approach (2nd ed., pp. 259-276). Sydney: Pearson.
Wadnipar, S., & Cruz, J. S. (2008). Determinación de la estructura de capital de las empresas colombianas. Revista Soluciones de Posgrado EIA , 23-44. https://www.cia.gov/Library/publications/the-world-factbook/geos/co.html
Zhang, Y. (2010). The product category effects on capital structure: Evidence from the SMEs of british manufacturing industry. International Journal of Business and Management, 5(8), 86112. Retrieved from http://search.proquest.com/docview/821817517?accountid=39909
Chen, L., & Chen, S. (2011). How the pecking-order theory explain capital structure. Journal of International Management Studies, 6(2), 1-9. Retrieved from http://search.proquest.com/docview/896547247?accountid=39909
Cortez, M. A., & Susanto, S. (2012). The determinants of corporate capital structure: evidence from Japanese Manufacturing Companies. Journal of International Business Research, 11(3), 121134. Retrieved from http://search.proquest.com/docview/1288097062?accountid=39909
DANE. (2014, December 18). PIB. Retrieved from http://www.dane.gov.co/index.php/pib
Hall, G., Hutchinson, P., & Michaelas, N. (2000). Industry effects of the determinants of unquoted SMEs' capital structure.International Journal of the Economics of Business, 7(3), 297-312. Retrieved from http://search.proquest.com/docview/212265530?accountid=39909
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review,76(2), 323. Retrieved from http://search.proquest.com/docview/233040216?accountid=39909
Jensen, M. C, & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3: 305-360.
Khan, Z. S. (2010). Determinants of Capital Structure: Case of Listed Paint Manufacturing Companies. Interdisciplinary Journal of Contemporary Research in Business, 2(6), 253-271. Retrieved from http://search.proquest.com/docview/815405577?accountid=39909
Kraus, A. (1973). A State-Preference Model of Optimal Financial Leverage. The Journal of Finance, 28(4), 911. Retrieved from http://search.proquest.com/docview/194699725?accountid=39909
Martínez, J., & López, E. (2007). Los ciclos de la inversión y su financiamiento en colombia. Borradores de Economía , 438.
Torres, O. (2011). Panel Data Analysis, Fixed & Random Effects. Princeton: Princeton.
Masnoon, M., & Anwar, F. (2012). Capital structure determinants of KSE listed pharmaceutical companies. Global Management Journal for Academic & Corporate Studies, 2(1), 19-38. Retrieved from http://search.proquest.com/docview/1366360046?accountid=39909
Mazur, K. (2007). The determinants of capital structure choice: Evidence from polish companies. International Advances in Economic Research, 13(4), 495-514. doi:http://dx.doi.org/10.1007/s11294-007-9114-y
Medina, A.M., Salinas, J.D., & Ochoa, L.M. (2012). Determinantes de la estructura financiera de las empresas manufactureras colombianas. Paper presented at XVII Congreso Internacional de Contaduría, Administración e Informática, Mexico, D.F. Retrieved from http://congreso.investiga.fca.unam.mx/docs/anteriores/xvii/docs/K04.pdf
Modigliani, F., & M. H. Miller. (1963). Corporate Income Taxes and the Cost of Capital: A Correlation. American Economic Review, 53(3), pp.276-298.
Modigliani, F., & Miller, M. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review, 48: 261-297.
Myers, S.C., & Majluf, N.S. (2002). Corporate Financing and Investment Decisions. When Firms Have Information the Investors Do Not Have (Working Paper No. 1396). Retrieved from National Bureau of Economic Research website: http://www.nber.org/papers/w1396
National Association of Business Owners of Colombia - ANDI. (2012). Colombia: balance 2012 y perspectivas 2013. Retrieved from http://www.andi.com.co/pages/noticias/noticia_detalle.aspx?IdNews=363
Nur, A. B. (2014). The dynamics of capital structure in the presence of zakat and corporate tax. International Journal of Islamic and Middle Eastern Finance and Management, 7(1), 89111. Retrieved from http://search.proquest.com/docview/1525631900?accountid=39909
Ping, L., & Caixia, H. (2011). To what extent capital structure decision can affect a listed company's total market value. Management Science and Engineering, 5(4), 45-49. Retrieved from http://search.proquest.com/docview/1021200804?accountid=39909
Riaz, F., & Afzal, M. (2011). Financial factors in capital structure decisions: Panel data analysis of pakistan's major manufacturing sectors. Interdisciplinary Journal of Contemporary Research in Business, 3(1), 310-326. Retrieved from http://search.proquest.com/docview/882911258?accountid=39909
Saylgan, G., Karabacak, H., & Küçükkocaoglu, G. (2006). The firm-specific determinants of corporate capital structure: Evidence from turkish panel data. Investment Management and Financial Innovations, 3, 125-139. Retrieved from http://search.proquest.com/docview/1282829636?accountid=39909
Tenjo, F., López, E., & Zamudio, N. (2006). Determinates de la estructura de capital de las empresas colombianas (1996-2002). Borradores de Economía , 380. Tenjo, F.
Umer, U. M. (2014). Determinants of capital structure: Empirical evidence from large taxpayer share companies in ethiopia.International Journal of Economics and Finance, 6(1), 53-65. Retrieved from http://search.proquest.com/docview/1500938167?accountid=39909
Veal, A. J. (2005). Business Research Methods: A Managerial Approach (2nd ed., pp. 259-276). Sydney: Pearson.
Wadnipar, S., & Cruz, J. S. (2008). Determinación de la estructura de capital de las empresas colombianas. Revista Soluciones de Posgrado EIA , 23-44. https://www.cia.gov/Library/publications/the-world-factbook/geos/co.html
Zhang, Y. (2010). The product category effects on capital structure: Evidence from the SMEs of british manufacturing industry. International Journal of Business and Management, 5(8), 86112. Retrieved from http://search.proquest.com/docview/821817517?accountid=39909