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Capital Structure Determinants within the Automotive Industry

Bakardjiev, Nicolai LU (2018) NEKP03 20181
Department of Economics
Abstract
This thesis aims to extend the capital structure literature and identify the firm specific determinants of leverage within the automotive industry, filling a gap in the academic literature, and providing a base for future research. Panel data comprised of 29 global automotive companies over a 10-year period, 2008-2017, is used to run OLS regressions on three classifications of capital structure: total debt, long-term debt, and short-term debt. Both the Pecking Order Theory and the Trade-off Theory are employed to offer predictions and justifications for the results detailed in this study. The empirical results identified in this thesis indicate that growth opportunities, the non-debt tax shield, and profitability produce a negative effect... (More)
This thesis aims to extend the capital structure literature and identify the firm specific determinants of leverage within the automotive industry, filling a gap in the academic literature, and providing a base for future research. Panel data comprised of 29 global automotive companies over a 10-year period, 2008-2017, is used to run OLS regressions on three classifications of capital structure: total debt, long-term debt, and short-term debt. Both the Pecking Order Theory and the Trade-off Theory are employed to offer predictions and justifications for the results detailed in this study. The empirical results identified in this thesis indicate that growth opportunities, the non-debt tax shield, and profitability produce a negative effect to total leverage while firm size and asset tangibility have a positive correlation. These results were predominantly supported by Trade-off Theory and its implications regarding capital structure choice. (Less)
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author
Bakardjiev, Nicolai LU
supervisor
organization
course
NEKP03 20181
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Capital Structure, Trade-off Theory, Pecking Order Theory, Firm Specific Determinants, Panel Data Regression.
language
English
id
8946076
date added to LUP
2018-07-04 13:54:10
date last changed
2018-07-04 13:54:10
@misc{8946076,
  abstract     = {This thesis aims to extend the capital structure literature and identify the firm specific determinants of leverage within the automotive industry, filling a gap in the academic literature, and providing a base for future research. Panel data comprised of 29 global automotive companies over a 10-year period, 2008-2017, is used to run OLS regressions on three classifications of capital structure: total debt, long-term debt, and short-term debt. Both the Pecking Order Theory and the Trade-off Theory are employed to offer predictions and justifications for the results detailed in this study. The empirical results identified in this thesis indicate that growth opportunities, the non-debt tax shield, and profitability produce a negative effect to total leverage while firm size and asset tangibility have a positive correlation. These results were predominantly supported by Trade-off Theory and its implications regarding capital structure choice.},
  author       = {Bakardjiev, Nicolai},
  keyword      = {Capital Structure,Trade-off Theory,Pecking Order Theory,Firm Specific Determinants,Panel Data Regression.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Capital Structure Determinants within the Automotive Industry},
  year         = {2018},
}