Advanced

Leverage in Pharma

Becht, Carl LU ; Nilsson, Atle LU and Ögren Brunsberg, Samuel LU (2018) FEKH89 20181
Department of Business Administration
Abstract (Swedish)
Purpose: To test established theories on capital structure determinants for the pharmaceutical industry and to discern the determinants of capital structure of this industry.

Methodology: A quantitative study is conducted using a deductive approach to statistically describe the nature of the global pharmaceutical industry's capital structure.

Theoretical perspective: The theoretical framework of this study consists of the trade-off theory and the pecking order theory. The study presents previous research on capital structure determinants for the pharmaceutical industry and companies in general. The theoretical foundation of the dependent and explanatory variables used in the study is also presented.

Empirical foundation: The... (More)
Purpose: To test established theories on capital structure determinants for the pharmaceutical industry and to discern the determinants of capital structure of this industry.

Methodology: A quantitative study is conducted using a deductive approach to statistically describe the nature of the global pharmaceutical industry's capital structure.

Theoretical perspective: The theoretical framework of this study consists of the trade-off theory and the pecking order theory. The study presents previous research on capital structure determinants for the pharmaceutical industry and companies in general. The theoretical foundation of the dependent and explanatory variables used in the study is also presented.

Empirical foundation: The sample consists of 209 global pharmaceutical companies from high- income OECD countries. The data was collected from Datastream and covers the time period of 2011 to 2016.

Conclusions: The statistically significant determinants of the capital structure for global pharmaceutical companies are dividends, profitability, size and corporate social responsibility. Dividends and profitability are negatively correlated with debt while size and corporate social responsibility are positively correlated. The trade-off theory is a better predictor for global pharmaceutical companies' capital structure determinants, with three significant results compared to the pecking order's one correct prediction. (Less)
Please use this url to cite or link to this publication:
author
Becht, Carl LU ; Nilsson, Atle LU and Ögren Brunsberg, Samuel LU
supervisor
organization
course
FEKH89 20181
year
type
M2 - Bachelor Degree
subject
keywords
Pharmaceutical Industry, Capital Structure, Pecking Order Theory, Trade-off Theory, Corporate Social Responsibility
language
English
id
8953965
date added to LUP
2018-07-04 11:33:34
date last changed
2018-07-04 11:33:34
@misc{8953965,
  abstract     = {Purpose: To test established theories on capital structure determinants for the pharmaceutical industry and to discern the determinants of capital structure of this industry.

Methodology: A quantitative study is conducted using a deductive approach to statistically describe the nature of the global pharmaceutical industry's capital structure.

Theoretical perspective: The theoretical framework of this study consists of the trade-off theory and the pecking order theory. The study presents previous research on capital structure determinants for the pharmaceutical industry and companies in general. The theoretical foundation of the dependent and explanatory variables used in the study is also presented.

Empirical foundation: The sample consists of 209 global pharmaceutical companies from high- income OECD countries. The data was collected from Datastream and covers the time period of 2011 to 2016.

Conclusions: The statistically significant determinants of the capital structure for global pharmaceutical companies are dividends, profitability, size and corporate social responsibility. Dividends and profitability are negatively correlated with debt while size and corporate social responsibility are positively correlated. The trade-off theory is a better predictor for global pharmaceutical companies' capital structure determinants, with three significant results compared to the pecking order's one correct prediction.},
  author       = {Becht, Carl and Nilsson, Atle and Ögren Brunsberg, Samuel},
  keyword      = {Pharmaceutical Industry,Capital Structure,Pecking Order Theory,Trade-off Theory,Corporate Social Responsibility},
  language     = {eng},
  note         = {Student Paper},
  title        = {Leverage in Pharma},
  year         = {2018},
}