IMPACT OF CAPITAL STRUCTURE POLICY ON VALUE OF THE FIRM – A STUDY ON SOME SELECTED CORPORATE MANUFACTURING FIRMS UNDER DHAKA STOCK EXCHANGE

Jahirul Hoque, Ashraf Hossain and Kabir Hossain
Additional contact information
Jahirul Hoque: Eastern University, Dhaka, Bangladesh
Ashraf Hossain: Eastern University, Dhaka, Bangladesh
Kabir Hossain: Eastern University, Dhaka, Bangladesh

EcoForum, 2014, vol. 3, issue 2, 9

Abstract: The study is about capital structure policy and its impacts on value of the firm. The outcome of this study was both the primary and secondary data. The study was based on opinions survey of 80 respondents of the 20 manufacturing corporate firms, enlisted under Dhaka Stock Exchange. The empirical analysis of the study was limited to a period of five years ranging 2008-2012. The major findings of the study are: (i) the most important determinant of capital structure policy as rated by the respondents have been financial risk , profitability, availability of fund, productivity, liquidity, operating risk, growth rate, proper timing, corporate tax, stability of sales/ investment etc, (ii) the study reveals that in terms of the average positions of capital structure and financial structure during 2008-2012, Beximco pharma has ranked first followed by Square pharma, Apex Adelchi, DESCO, ACI ltd, Titas gas, Bata shoe,Aftab automobile, Reneata pharma, Square textile ltd etc,(iii) as regards the value of the firm during the study period, Titas gas has obtained first rank followed by Square pharma, DESCO, Beximco pharma, BATBC, ACI, Reneta pharma, Apex Tennary, Apex Adelchi, Bata shoe and so on.(iv) this study has portrayed that the independent variables namely capital structure (CS), debt to equity (DER) & debt to asset (DR), fixed assets to total assets(Tangibility), earnings before interest and taxes to interest charges(ICR), financial leverage multiplier(FLM) have influenced value of the firm(VF) to the extent of 79.1 percent significantly. Therefore, it is recommended that the relevant firm’s authority should take proper measures in order to improve the independent variables having positive influence on value of the firms.

Keywords: Value of the Firm; Cost of Funds; Financial risk; Return on Investment; Return on Equity; Debt ratio; Debt-Equity Ratio; Profitability; DSE. (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://ecoforumjournal.ro/index.php/eco/article/download/84/71 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:scm:ecofrm:v:3:y:2014:i:2:p:9

Access Statistics for this article

EcoForum is currently edited by Association of Educational and Cultural Cooperation Suceava

More articles in EcoForum from "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department. Contact information at EDIRC.
Bibliographic data for series maintained by Iulian Condratov ().