Capital Structure and Financial Performance
(2015) FEKN90 20151Department of Business Administration
- Abstract
- The purpose of the research is to conclude whether there is conjunction
between a company's capital structure and its stock return. The data is collected monthly under ten years and processed into a tracking portfolio, which makes the study qualitative. A Welch’s t-test is performed in
order to show the statistical relationship between capital structure and stock returns. The theoretical framework relies on traditional theories on capital structure: the Modigliani-Miller Theorem, the Traditional Trade-Off Theory
and the Pecking-Order Hypothesis. Also, different more recent publications are brought up into the theoretical framework. Collection of observations from three sectors within S&P 500 between January 2004 and December 2013, based... (More) - The purpose of the research is to conclude whether there is conjunction
between a company's capital structure and its stock return. The data is collected monthly under ten years and processed into a tracking portfolio, which makes the study qualitative. A Welch’s t-test is performed in
order to show the statistical relationship between capital structure and stock returns. The theoretical framework relies on traditional theories on capital structure: the Modigliani-Miller Theorem, the Traditional Trade-Off Theory
and the Pecking-Order Hypothesis. Also, different more recent publications are brought up into the theoretical framework. Collection of observations from three sectors within S&P 500 between January 2004 and December 2013, based on 15,120 data points. Significant differences in financial performance related to capital structure are found. Low leveraged companies in the consumer discretionary sector tend to perform better than high leveraged firms. Differences in stock return between companies in consumer staples are only found after the crisis, where high leveraged firms perform better. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/7370076
- author
- Lukaszewicz, Magdalena LU and Helén, Anna
- supervisor
- organization
- course
- FEKN90 20151
- year
- 2015
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Capital structure, debt-to-equity ratio, leverage, financial performance, company value, stock return, industrial companies, consumer discretionary, consumer staples, S&P500, financial crisis
- language
- English
- id
- 7370076
- date added to LUP
- 2015-06-22 15:44:25
- date last changed
- 2015-06-22 15:44:25
@misc{7370076, abstract = {{The purpose of the research is to conclude whether there is conjunction between a company's capital structure and its stock return. The data is collected monthly under ten years and processed into a tracking portfolio, which makes the study qualitative. A Welch’s t-test is performed in order to show the statistical relationship between capital structure and stock returns. The theoretical framework relies on traditional theories on capital structure: the Modigliani-Miller Theorem, the Traditional Trade-Off Theory and the Pecking-Order Hypothesis. Also, different more recent publications are brought up into the theoretical framework. Collection of observations from three sectors within S&P 500 between January 2004 and December 2013, based on 15,120 data points. Significant differences in financial performance related to capital structure are found. Low leveraged companies in the consumer discretionary sector tend to perform better than high leveraged firms. Differences in stock return between companies in consumer staples are only found after the crisis, where high leveraged firms perform better.}}, author = {{Lukaszewicz, Magdalena and Helén, Anna}}, language = {{eng}}, note = {{Student Paper}}, title = {{Capital Structure and Financial Performance}}, year = {{2015}}, }