Capital Structure and Firm Performance. Evidence from Japan Nikkei 225

Master's Thesis , 2020 , 59 Pages , Grade: 1,3

Business economics - Investment and Finance

This study investigates what kind of impact different leverage ratios have on firm performance measurements Return on Assets, Return on Equity and Tobin’s Q in selected firms listed on Nikkei 225 stock market (excluding Finance & Technology Sector). Furthermore, the influence of sector specific and possible control variables on capital structure (using long- & short-debt ratios) as well as firm performance will be analysed. The sample derive from 165 firms during the time period from 2014 to 2019 and analysed by using various Models multiple regression analysis.

Control variables Size and Growth show a clear positive effect on firm performance. In contrast, Tangibility has a negative impact on the model in which all companies are included, but has more positive coefficients in the model in which companies are divided into their industries. Additionally, this study suggests that the effect of leverage on firm performance differs among industries. Short- and long-term debt has positive impacts on different firm performance measurements by the Materials, Reals Estate, Energy and Communication Services Sector.

Inhaltsverzeichnis (Table of Contents)

• ACKNOWLEDGEMENTS.
• TABLE OF CONTENTS.
• LIST OF FIGURES
• LIST OF TABLES.
• LIST OF ABBREVIATIONS.
• ABSTRACT..
• 1. INTRODUCTION
• 2. LITERATURE REVIEW
• 2.1 CAPITAL STRUCTURE FINANCE THEORIES.
• 2.1.1 Trade-Off Theory.
• 2.1.2 Pecking-Order Theory...........
• 2.1.3 Agency-Cost Theory.
• 2.2 EFFECTS OF THE CAPITAL STRUCTURE ON FIRM PERFORMANCE.
• 2.2.1 Impact of Trade-Off Theory
• 2.2.2 Impact of Pecking-Order Theory
• 2.2.3 Impact of Agency-Cost Theory.....
• 2.3 EMPIRICAL STUDIES ON THE INFLUENCE OF LEVERAGE ON FIRM PERFORMANCE
• 2.3.1 Negative Impact of Leverage on Firm Performance....
• 2.3.2 Positive Impact of Leverage on Firm Performance.
• 2.4 OTHER INFLUENCING FACTORS ON CAPITAL STRUCTURE
• 3. RESEARCH DESIGN
• 3.1 RESEARCH GAP
• 3.2 RESEARCH OBJECTIVES..
• 3.3 RESEARCH QUESTIONS.
• 4. RESEARCH METHODOLOGY..
• 4.1 RESEARCH PHILOSOPHY
• 4.2 DATA COLLECTION
• 4.3 DATA ANALYSIS: REGRESSION MODELS AND PRACTICAL IMPLEMENTATION.
• 5. EMPIRICAL FINDINGS AND ANALYSIS
• 5.1 DESCRIPTIVE STATISTICS OF DATA SET
• 5.2 CORRELATION RESULTS INDEPENDENT VARIABLES.
• 5.3 REGRESSION RESULTS..
• 5.3.1 Regression Results by Leverage Models
• 5.3.2 Regression Results by Industry.
• 6. DISCUSSION

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This thesis aims to investigate the relationship between capital structure and firm performance, focusing on the Japanese Nikkei 225 index. The research explores various capital structure theories, their impact on firm performance, and the influence of different leverage models and industry sectors.

• The impact of capital structure on firm performance.
• The application of different capital structure theories.
• The influence of leverage models on firm performance.
• The role of industry sector in shaping the capital structure-firm performance relationship.
• The identification of other factors influencing capital structure decisions.

Zusammenfassung der Kapitel (Chapter Summaries)

The thesis begins with an introduction, outlining the research question and objectives. Chapter 2 reviews existing literature on capital structure theories and their impact on firm performance, analyzing the perspectives of the trade-off theory, the pecking-order theory, and the agency-cost theory. It also examines empirical studies on the influence of leverage on firm performance, highlighting both positive and negative impacts. Chapter 3 details the research design, focusing on the research gap, objectives, and research questions. Chapter 4 delves into the research methodology, outlining the research philosophy, data collection methods, and the specific regression models used in data analysis. Chapter 5 presents the empirical findings and analysis, including descriptive statistics, correlation results of independent variables, and regression results by both leverage models and industry. This chapter provides the foundation for further discussion and conclusion.

Schlüsselwörter (Keywords)

Capital structure, firm performance, leverage, trade-off theory, pecking-order theory, agency-cost theory, Japanese Nikkei 225, regression analysis, industry sector, firm size, profitability.

• College: University of Greenwich
• Grade: 1,3
• Author: Tobias Burkhart (Author)
• Publication Year: 2020
• Pages: 59
• Catalog Number: V1031166
• ISBN (eBook): 9783346462404
• ISBN (Book): 9783346462411
• Language: English
• Tags: capital, structure, firm, performance, evidence, japan, nikkei 225