{"id":432086,"date":"2018-03-28T20:22:04","date_gmt":"2018-03-28T20:22:04","guid":{"rendered":"https:\/\/essaypaper.org\/the-determinants-of-capital-structure\/"},"modified":"2018-10-24T09:18:50","modified_gmt":"2018-10-24T09:18:50","slug":"the-determinants-of-capital-structure","status":"publish","type":"post","link":"https:\/\/www.benedictsol.com\/blogs\/the-determinants-of-capital-structure\/","title":{"rendered":"The Determinants of Capital Structure"},"content":{"rendered":"\n
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Module Title<\/span><\/strong><\/p>\n<\/td>\n

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Corporate Financial Management<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/strong><\/p>\n

\u00a0<\/span><\/strong><\/p>\n\n\n\n
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Word Length <\/span><\/strong><\/p>\n<\/td>\n

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2500 (+\/- 10% tolerance)<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/strong><\/p>\n

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Assignment Title<\/span><\/u><\/em><\/strong><\/p>\n

\u00a0<\/span><\/span><\/u><\/em><\/strong><\/p>\n

Assignment Title: The Determinants of Capital Structure<\/span><\/strong><\/p>\n

\u00a0<\/span><\/strong><\/p>\n

In this coursework<\/span> you are asked to critically analyse the factors that influence a company\u2019s capital structure decision using international data. <\/span><\/p>\n

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To accomplish this, follow the steps below<\/span><\/p>\n<\/div>\n

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1)\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Select a number of listed, non-financial firms to perform the international analysis. Your sample must contain:<\/span><\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>at least 50 non-financial companies listed on the London Stock Exchange, and,<\/span><\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>at least 50 listed non-financial companies from another country of your choice.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

2)\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Obtain the necessary financial information to calculate the following proxies, i.e.<\/span><\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Leverage (ratio of total debt to total assets);<\/span><\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Profitability (ratio of earnings before interest and tax to total assets);<\/span><\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Market-to-book ratio [(total assets \u2013 book value of equity + market value of equity) to total assets]; <\/span><\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Size (logarithm of total sales);\u00a0 <\/span><\/span><\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Tangibility (ratio of property plant and equipment to total assets);<\/span><\/p>\n

The data should cover five consecutive years, ending in 2016.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

3)\u00a0\u00a0\u00a0 <\/span><\/span><\/span>In order to compare determinants of capital structure across two countries, estimate one regression for each country, and one for the total sample (three regressions in total), using the following OLS regression model<\/span><\/p>\n

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Leveragei,t<\/sub>=\u03b1 + \u03b21<\/sub>Profitabilityi,t<\/sub> + \u03b22 <\/sub>Market-to-Booki,t<\/sub>+ \u03b23 <\/sub>Sizei,t<\/sub> + \u03b24 <\/sub>Tangibiltiyi,t<\/sub> + \u03b5i,t<\/sub><\/span><\/em><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/sub><\/p>\n

4)\u00a0\u00a0\u00a0 <\/span><\/span><\/span>On the basis of the regression models estimated in step 3, evaluate the importance of each factor in terms of the impact on the capital structure decision. The evaluation should also include discussion on<\/span> international differences, and\/or similarities. <\/span><\/p>\n

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5)\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Critically discuss your results in terms of their consistency with the relevant literature.<\/span><\/p>\n

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6)\u00a0\u00a0\u00a0 <\/span><\/span><\/span><\/strong>Finally, suggest how the model presented in the third step could be extended, in order to explain better the capital structure decision. The recommendation of a factor to include in the model should be supported by a relevant empirical and theoretical evidence.<\/span><\/p>\n

Notes:<\/span><\/u><\/strong><\/p>\n

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1.\u00a0\u00a0\u00a0 <\/span><\/span><\/span>It is highly recommended to obtain the list of firms and the data outlined in the second step of the requirements from one of the following databases: Datastream, Thomson One, Bloomberg.<\/span><\/p>\n

2.\u00a0\u00a0\u00a0 <\/span><\/span><\/span>The raw data does not need to be included in the submission, however some basic information on the selected firms must be provided, for example<\/span> the number of firms used, country selected.<\/span><\/p>\n

3.\u00a0\u00a0\u00a0 <\/span><\/span><\/span>The regression models must be estimated in STATA or Excel. Both programmes are available for use at the University owned<\/span> computers.<\/span><\/p>\n

4.\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Before you start planning your essay, please refer to the module website on https:\/\/canvas.hull.ac.uk<\/u> for further information on:<\/span><\/p>\n

i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Coursework submission deadline;<\/span><\/p>\n

ii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Assessment criteria for coursework; and<\/span><\/p>\n

iii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Coursework submission procedures.<\/span><\/p>\n

5.\u00a0\u00a0\u00a0 <\/span><\/span><\/span>You should also refer to the Module Handbook for a list of references and the Journals for general essential reading, which may be related to the assignment topic. However, you are strongly advised to also benefit from the range of references and resources available throughout the University Library.<\/span><\/p>\n

6.\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Financial data on a company of your choice can be obtained from various databases available to students at Hull University Business School (for example Bloomberg, Thomson Reuters (Thomson One, Datastream), COMPUSTAT). <\/span><\/p>\n

\u00a0<\/span><\/p>\n

This essay is designed to partially test the following learning outcomes i.e.:<\/span><\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Relate empirical evidence to corporate finance theory with an understanding of limitations of such evidence (LO. 3)<\/span><\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span><\/span>Reveal an ability to obtain, evaluate relevant data and draw reasoned conclusions concerning corporate finance policies (LO. 4).<\/span><\/p>\n

\u00a0<\/span><\/span><\/u><\/strong><\/p>\n

Assessment guide<\/span><\/u><\/strong><\/p>\n

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For the assessment of this assignment the following general criteria will be used: <\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u2022\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>70% and above mark: <\/span><\/p>\n

The discussion provides an exceptional account of the topic and illustrates competence and understanding together with creativity and originality. The discussion also arrives at a considered and balanced conclusion. Relevant influences\/applicable theories and empirical works are explored with the debate providing both an analytical and critical exposition. The discussion shows comprehensive evidence of wide reading\/research illustrated throughout the discussion, with relevant referencing to the appropriate<\/span> authority.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u2022\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>60% \u2013 69% mark: <\/span><\/p>\n

The discussion illustrates a thorough and competent understanding of the topic. A competent analytical approach is taken in the debate, and selected theories\/techniques\/existing empirical results\/methodologies are explored within the context of a balanced and well-presented discussion. There is also relevant referencing to the appropriate<\/span> authority, with the discussion containing no significant errors and\/or omissions. <\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u2022\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>50% \u2013 59% mark: <\/span><\/p>\n

The discussion is mainly descriptive and lacks any critical insight. Identified influences related to the capital structure of the company selected are accepted with little criticism, and little or no attempt is made to provide a critique of applicable theories, techniques, and\/or methodologies. Although relevant theories, techniques, and\/or methodologies are discussed, illustrating some understanding of main issues, the debate is lacking in analysis and coverage. Reading and research whilst balanced and thorough is<\/span> nonetheless limited. <\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u2022\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>40% \u2013 49% mark: <\/span><\/p>\n

The discussion of provides an adequate coverage of the topic. However,<\/span> there is limited evidence of understanding. The essay is mainly descriptive with no critical comment provided. There is also little evidence of reading\/research. <\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u2022\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>30% \u2013 39% mark <\/span><\/p>\n

The discussion fails to provide an adequate account of any of the topic. There is little evidence of understanding with little or no evidence of reading\/research. <\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u2022\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span>< 29% <\/span><\/p>\n

\n

The discussion fails to provide an adequate account on the topic. More importantly<\/span> the discussion is unstructured and contains many grammatical errors. There is little evidence of understanding with little or no evidence of appropriate reading\/research. <\/span><\/p>\n

\u00a0<\/span><\/p>\n<\/div>\n

\u00a0<\/span><\/strong><\/p>\n

\u00a0<\/span><\/strong><\/p>\n

eSubmission is the approved method for your HUBS programme of study.\u00a0 <\/span>You must hand in your assessed Assignment(s), for all modules that you are taking during the 2017\/18 Academic Year using the Canvas system.\u00a0 <\/span>Submission of a printed copy is NOT allowed. You should submit via the Assignments<\/strong> menu item on the relevant module canvas<\/span> site.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

Assignments must be submitted by the date and time stipulated.\u00a0 <\/span>Deadlines will be strictly adhered to.\u00a0 <\/span>Students submitting late, and who do not have mitigating circumstances approved by the Mitigating Circumstances Panel, will be subject to penalties for late submission specified by the University.\u00a0 <\/span>Please note that Saturday and Sunday are treated as \u201cworking days\u201d for the purposes of the late submission policy.<\/span><\/p>\n

\u00a0<\/span><\/strong><\/p>\n

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