A study on the effects of firm-specific variables on the financing decisions of selected Philippine publicly listed firms for the period 2002-2008

• Main Authors: Jazul, Kimberly Joy, Labatete, Mary Grace, Leonardo, Lizl Therese, Tan, Charles Francis
• Format: text
• Language: English
• Published: Animo Repository 2010
• Subjects: Capital investments > Philippines; Business enterprises > Philippine > Finance; Corporations > Philippines > Finance
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18327
• Institution: De La Salle University

This paper aimed to study variables which are deemed indicators of financing decisions by firms in the Philippines. The model was inclusive of independent variables which determined the financing requirements while the dependent variables were those sources of financing. Specifically, the variables undertaken in this study to show the magnitude and relative importance of debt and equity to financing decisions were: change in cash holdings, short-term debt issues, long-term debt issues, equity issues, treasury shares, investment in net working assets, investment in fixed assets and net income. The results exhibited evidences that profit shortfalls are often financed by firms using short-term debt. Moreover, firms belonging to the category of the top thirty high-growth, high leveraged and bottom 30 low-profit firms rely heavily on equity. Capital expenditures are financed mostly using debt. There was no clear evidence as to whether agency costs and information asymmetry cause firms to use equity as a resort. In fact, there had been some cases when firms use equity even in very high adverse selection situations.