Capital structure and profitability in the Australian service-sector firms: a panel data analysis

Ahmed, Rafiuddin (2015) Capital structure and profitability in the Australian service-sector firms: a panel data analysis. In: Proceedings of World Business, Finance and Management Conference: New Zealand 2015. 330. pp. 1-9. From: World Business, Finance and Management Conference, 14-15 December 2015, Auckland, New Zealand.

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Abstract

The relationship between capital structure and firm performance has been examined in different countries for decades. The current study is aimed to extend this body of research to include the Australian service-sector. Using cross sectional panel data from 63 Australian listed companies over three years (2012-2014), this study examines how profitability or firm performance is affected by capital structure (debt/equity) choices. The current study is different from past studies in that growth of assets and revenues are used as two new control variables along with the other commonly used control variable, size. The panel data regression finds that short-term debt dominates debt choices of Australian service-sector companies. The finding is, to some extent, similar to trends in debt financed operations observed in companies in developed and developing countries. The finding is unexpected as the sectoral and institutional borrowing rules and regulations are different in Australia are different from the companies in other parts of the world.

Item ID: 42164
Item Type: Conference Item (Research - E1)
ISBN: 978-1-922069-91-7
Keywords: capital structure, profitability, Australia, service-sector, leverage
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Date Deposited: 25 Jan 2016 04:36
FoR Codes: 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1502 Banking, Finance and Investment > 150201 Finance @ 40%
15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1502 Banking, Finance and Investment > 150203 Financial Institutions (incl Banking) @ 25%
15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management @ 35%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910206 Market-Based Mechanisms @ 50%
91 ECONOMIC FRAMEWORK > 9101 Macroeconomics > 910109 Savings and Investments @ 50%
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