Contact us
 |
[email protected] |
 |
3275638434 |
 |
 |
| Paper Publishing WeChat |
Useful Links
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
Author(s)
Gang Chen, Mahfuzul Haque
Full-Text PDF
XML 2098 Views
DOI:10.17265/1537-1514/2015.01.001
Affiliation(s)
Gang Chen, Ph.D., associate professor, Department of Financial Management, Business School, Shandong University of Technology, Zibo, 255012 Shandong, P. R. China.
Mahfuzul Haque, Ph.D., professor of Finance, Department of AFIRM, Scott College of Business, Indiana State University, Terre Haute, IN 47809, USA.
ABSTRACT
Asset structure is an important and explicit indicator of asset investment and financial performance of a firm. As previous studies on asset structure did not reveal the actual tendency of specific manufacturing industry, this research examines the asset structure of the chosen manufacturing industry. Using panel data of the sample companies and generalized moment method (GMM) for the empirical testing, the results of the empirical analysis indicate that the average of the asset structure (represented by the ratio of current asset to total asset) almost holds on firmly to a constant value of 0.6, through the period of 2006 to 2013. No evidence reveals the collective characteristic of volatility during this period. In addition, the observed data present a slight-downward curve in the level of average current asset ratio during this period. Asset structure, together with first difference of return on asset (ROA) and return on equity (ROE), is the significant determinant of ROA. These findings may have a profound influence on directing internal investment and some sample companies may be taken as an example by corporate financial policy maker from both developed and developing countries.
KEYWORDS
asset structure, financial ratios, financial performance, return on asset (ROA), return on equity (ROE)
Cite this paper
References
Akintoye, I. (2008). Effect of capital structure on firms’ performance: The Nigerian experience. European Journal of Economics, Finance and Administrative Sciences, 10, 233-243.
Ambrose, B. W., & Megginson, W. L. (1992). The role of asset structure, ownership structure, and takeover defenses in determining acquisition likelihood. Journal of Financial & Quantitative Analysis, 27(4), 575-589.
An, Z. (2013). Private property rights, investment patterns, and asset structure. Economics & Politics, 25(3), 481-495.
Arbidane, I., & Zelgalve, E. (2012). Current assets structure and exploration of business in Latvia. European Integration Studies, 6, 185-191.
Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277-297.
Constand, R. L., Osteryoung, J. S., & Nast, D. A. (1991). Asset-based financing and the determinants of capital structure in the small firm. Advances in Small Business Finance, 21, 29-45.
Czyzewski, A. B., & Hicks, D. W. (1992). Hold onto your cash. Management Accounting, 73(3), 4-4.
De Almeida, J. R., & Eid, W. (2014). Access to finance, working capital management and company value: Evidences from Brazilian companies listed on BM&FBOVESPA. Journal of Business Research, 67(5), 924-934.
Ding, S., Guariglia, A., & Knight, J. (2013). Investment and financing constraints in China: Does working capital management make a difference? Journal of Banking & Finance, 37(5), 1490-1507.
Jose, M. L., Lancaster, C., & Stevens, J. L. (1996). Corporate returns and cash conversion cycles. Journal of Economics & Finance, 20(1), 33.
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48(3), 261.
Muritala, T. A., & Ajibola, O. B. (2013). Does capital structure enhance firm performance? Evidence from Nigeria. The IUP Journal of Accounting Research & Audit Practices, 12(4), 43-55.
Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147-175.
Myers, S. C. (1984). The capital structure puzzle. Journal of Finance, 39(3), 575-592.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
Sanyal, P., & Mann, C. L. (2010). The financial structure of startup firms: The role of assets, information, and entrepreneur characteristics. Boston: Federal Reserve Bank of Boston.
Sibilkov, V. (2009). Asset liquidity and capital structure. Journal of Financial and Quantitative Analysis, 44(5), 1173-1173.
Stulz, R. M., & Johnson, H. (1985). An analysis of secured debt. Journal of Financial Economics, 14(4), 501-521.