A comparative analysis of capital structure and its determinants using selected multinational and local firms in the manufacturing industry for the period 2001-2005

• Main Authors: Dionela, Virmarie B., Manigbas, Anne Maureen B.
• Format: text
• Language: English
• Published: Animo Repository 2007
• Subjects: Capital; Corporations > Finance; Business enterprises > Finance; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/5716
• Institution: De La Salle University

Capital structure is the mixture of debt and equity utilized by a firm to finance its operations. Studies have shown that there are factors which influence the capital structure of firms. These factors are more popularly known as determinants and consequently include tangibility, growth, firm size, profitability, volatility, tax, non-debt tax shields, ownership structure and managerial shareholdings, networking, and relationship with banks. In this study, the proponents solely focused on the leverage portion of capital structure and made use of the first five determinants mentioned. Samples were taken from the manufacturing industry, which has consistently performed well, over the years. The companies selected were then classified into two main categories namely, local and multinational firms. Afterwards, the relationship between leverage and the determinants utilized were identified through the use of multivariate linear regression. Aside from this, a comparison between the overall preference of domestic and multinational firms for both long-term and short-term debt was performed. Lastly, the proponents were able to ascertain, which of the five determinants had a significant relationship to leverage.