Determinants of capital structure of selected life insurance companies in the Philippine

• Main Authors: Lee, Jamie L., Ong, Katherine X., Singson, Cassandra Louise T., Solis, Ma. Bernadette C.
• Format: text
• Language: English
• Published: Animo Repository 2013
• Subjects: Insurance companies > Philippines; Insurance companies > Philippines > Management; Insurance companies > Investment > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18320
• Institution: De La Salle University

In recent years, life insurance sector in the Philippines has grown stronger and remained stable. With this, the researchers attempt to examine the determinants of the capital structure of selected life insurance companies that have been received little attention in the Philippines. Specifically, the study includes potential determinants of capital structure used in earlier research for the years 2006 to 2010, using a panel data of 24 private life insurance companies (domestic and foreign). Leverage is used as the dependent variable and firm-level factors such as size, age, growth, profitability, tangibility, liquidity, and risk are used as independent variables. Findings suggest that there is no heterogeneity across firms or by time periods, rejecting both implications of fixed effects least-squares dummy variable (LSDV) and random effects model (REM) thus polled ordinary least squares (OLS) model is the appropriate basis for the entire analysis of the firm-level factors. The results from running a regression of the pooled OLS model indicate that size, age, profitability, and tangibility are important determinants of capital structure of selected life insurance companies in the Philippines while growth, liquidity, and risk are insignificant. With regard to the 2007 global financial crisis, findings suggest that a structural change of capital occured within the pre- and post- financial crisis, but the selected life insurance firms in the Philippines experienced only a mild impact.