The present study aims to investigate to what extent capital structure has an impact on profitability and closely associated factors due to a series of bankruptcies and bail-outs within the last twelve months. The analysis refers to firms listed in the S&P 500 index on January 2004 and evaluates their performance from 2004 to 2008. The results show strong industry-specific characteristics for all factors observed, i. e. gearing, profitability, liquidity, investments and dividends. In addition, findings indicate a negative effect of higher gearing for almost all ten sectors in respect of the core variables analysed. Neither the trade-off nor the pecking order theory can be confirmed, however, more support for the former is found. Due to the complexity of capital structure choice, regulations have very limited effects that require the need for independent non-governmental monitoring agencies to improve transparency and have the authority to intervene if managers act at the expense of public interest.
Inhaltsverzeichnis
1;Contents List;3 2;Abbreviations;5 3;1 Introduction;7 3.1;1.1 General Definition and Justification of Issues and Objectives;7 3.2;1.2 Research Questions and Methodology;9 3.3;1.3 Overview and Organisation of Chapters;10 4;2 Existing Theories and their Predictions;13 4.1;2.1 Existing Theories;13 4.1.1;2.1.1 The Trade-Off Theory;16 4.1.2;2.1.2 The Pecking Order Theory;19 4.2;2.2 Predictions of Existing Theories;22 4.2.1;2.2.1 Capital Structure and Industry;22 4.2.2;2.2.2 Capital Structure and Profitability;26 4.2.3;2.2.3 Capital Structure and Liquidity;28 4.2.4;2.2.4 Capital Structure, R&D and Tangible Assets;29 4.2.5;2.2.5 Capital Structure and Dividend Policy;32 4.3;2.3 A Final Comment;34 5;3 Methodology;35 5.1;3.1 Data Sampling;35 5.2;3.2 Data Collection;36 5.2.1;3.2.1 Missing Values and Adjustments;37 5.3;3.3 Variables and their Definitions;38 5.3.1;3.3.1 Leverage and Gearing;38 5.3.2;3.3.2 Profits and Return;40 5.4;3.4 Hypotheses and Hypotheses Testing;40 5.4.1;3.4.1 H1: Capital Structure and Industry;41 5.4.2;3.4.2 H2: Capital Structure and Profitability;42 5.4.3;3.4.3 H3, H4 and H5: Capital Structure, Liquidity, R&D and Dividend Policy;43 6;4 Findings and Analysis;45 6.1;4.1 H1: The Impact of Industry on Capital Structure and Associated Variables;45 6.2;4.2 H2: The Existence of a Correlation Between Leverage and ROCE;55 6.3;4.3 H3: The Existence of a Correlation Between Leverage and Liquidity;60 6.4;4.4 H4: The Existence of a Correlation Between Leverage and R&D;63 6.5;4.5 H5: The Existence of a Correlation Between Leverage and Dividends;67 7;5 Conclusions;72 7.1;5.1 Capital Structure;72 7.2;5.2 Profitability;73 7.3;5.3 Liquidity;74 7.4;5.4 Investments;74 7.5;5.5 Dividends;75 8;6 Recommendations;77 9;7 Reflections;81 9.1;7.1 Objectives;81 9.2;7.2 Strengths;81 9.3;7.3 Weaknesses and Limitations;82 10;Bibliography;84 11;Appendix;91 12;Autorenprofil;125
