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Capital Structure and Profitability: S&P 500 Enterprises in the Light of the 2008 Financial Crisis

:	Elmar Puntaier
:	Capital Structure and Profitability: S&P 500 Enterprises in the Light of the 2008 Financial Crisis
:	Diplomica Verlag GmbH
:	9783836645478
:	1
:	CHF 29.30
:

:	Allgemeines, Lexika
:	English

:	126
:	kein Kopierschutz/DRM
:	PC/MAC/eReader/Tablet
:	PDF

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.

	Contents List	3
	Abbreviations	5
	1 Introduction	7
	1.1 General Definition and Justification of Issues and Objectives	7
	1.2 Research Questions and Methodology	9
	1.3 Overview and Organisation of Chapters	10
	2 Existing Theories and their Predictions	13
	2.1 Existing Theories	13
	2.1.1 The Trade-Off Theory	16
	2.1.2 The Pecking Order Theory	19
	2.2 Predictions of Existing Theories	22
	2.2.1 Capital Structure and Industry	22
	2.2.2 Capital Structure and Profitability	26
	2.2.3 Capital Structure and Liquidity	28
	2.2.4 Capital Structure, R	28
	29	28
	2.2.5 Capital Structure and Dividend Policy	32
	2.3 A Final Comment	34
	3 Methodology	35
	3.1 Data Sampling	35
	3.2 Data Collection	36
	3.2.1 Missing Values and Adjustments	37
	3.3 Variables and their Definitions	38
	3.3.1 Leverage and Gearing	38
	3.3.2 Profits and Return	40
	3.4 Hypotheses and Hypotheses Testing	40
	3.4.1 H1: Capital Structure and Industry	41
	3.4.2 H2: Capital Structure and Profitability	42
	3.4.3 H3, H4 and H5: Capital Structure, Liquidity, R	42
	43	42
	4 Findings and Analysis	45
	4.1 H1: The Impact of Industry on Capital Structure and Associated Variables	45
	4.2 H2: The Existence of a Correlation Between Leverage and ROCE	55
	4.3 H3: The Existence of a Correlation Between Leverage and Liquidity	60
	4.4 H4: The Existence of a Correlation Between Leverage and R	60
	63	60
	4.5 H5: The Existence of a Correlation Between Leverage and Dividends	67
	5 Conclusions	72
	5.1 Capital Structure	72
	5.2 Profitability	73
	5.3 Liquidity	74
	5.4 Investments	74
	5.5 Dividends	75
	6 Recommendations	77
	7 Reflections	81
	7.1 Objectives	81
	7.2 Strengths	81
	7.3 Weaknesses and Limitations	82
	Bibliography	84
	Appendix	91
	Autorenprofil	125