The impact of debt on the financial performance of publicly listed non-financial companies in the Philippines

• Main Authors: Baluyot, Railey B., Huang, Zushuo, Lee, Dino Bernando C., Monfero, Reymond Patrick P.
• Format: text
• Language: English
• Published: Animo Repository 2010
• Subjects: Corporations > Finance; Business enterprises > Finance; Business enterprises > Philippines; Accounting
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14004
• Institution: De La Salle University

This study is centered on evaluating the influence of changes in levels of debt on the financial performance of companies. It will be conducted using information from all publicly listed non-financial companies in the Philippines for a period of 5 years which is from 2005 to 2009. Underlying theories regarding the study can be considered to address Modigliani and Miller's (1963) theory on capital structure specifically, the factors that it has neglected. The static trade-off theory, pecking order theory, agency theory, and moderate view theory will all be integrated to build a framework that can satisfy the objectives of the study. The framework's model will be developed in reference to what Abor (2007) used in his study. In general, such a model will be using measures of debt levels and firm size as independent variables that explain the behavior of dependent variables represented by measures of financial performance. The researchers will be using a causal and, at the same time, both a quantitative and qualitative research design. Panel data analysis will be adapted to generate results from the independent and dependent variables which are capital structure and financial performance, respectively. The study will generally be helping private and government organization managers (particularly those in the Philippines), current and potential investors, the academe, and other researchers interested with the topic by creating awareness and familiarity in managing capital structure, establishing benchmarks for evaluation, applying theories relevant to capital structure, and providing affirmation or refute to conflicting stances that contribute in filling out research gaps.