The effect of the determinants of the financing structure on the added market value via financial leverage and the economic value added.
(An analytical study of a sample of industrial companies listed in the Iraq Stock Exchange)
Thesis submitted to the Council of the College of Administration and Economics / University of Karbala
It is part of the requirements for obtaining a Ph.D. in Business Administration
submit it
Hayder Khudhair Jwan
Under the supervision of Assistant Professor Dr
Ali Ahmed Fares
Abstract:
The study sought to achieve many goals, the most important of which is to test the impact and contribution of the determinants of the financing structure represented by (company size, age, tangibility of assets, profitability, liquidity, growth opportunities and tax exemption) in the added market value through financial leverage and the added economic value of a sample of Iraqi industrial companies listed in the Iraqi market for the securities of the ten companies.
The problem of the study was the continuous decline in the values of the companies shown in the published financial reports and the difficulties facing Iraqi companies in exploiting the determinants of the financing structure to increase the added market value when mediating the added economic value and financial leverage when choosing the appropriate mix of loans and property rights.
The study was conducted in the Iraq Stock Exchange (ISX) out of a total of 130 listed companies, of which 25 companies represent the industrial sector, where companies of non-industrial sectors are excluded, as well as companies in the industrial sector that have missing years over a 14-year period extending from 2005 to 2018. After Applying the above determinants, the final sample consisted of 10 industrial companies listed in the above market.
The study used a set of financial methods to extract the value of the company’s size and life through the natural logarithm of the total assets and the life of the company, as well as the tangibility of assets through the ratio of fixed assets to total financing, and growth opportunities represented by the percentage change in total assets, as well as the researcher used the ratio of return on assets and return On the right of ownership, the circulation ratio and the tax exemption represented by the percentage of extinction to the total assets, and finally the researcher used the financial leverage, the added economic value and the added market value.
The study adopted path analysis for the purpose of testing the effect of the independent variables on the dependent variable through the intermediate variables. While the researcher used the (Bootstrap) method for the purpose of testing the significance of the total indirect effect. Note that the path analysis and test were carried out using the statistical program (AMOS, V.23).
The results showed that five companies, which constitute half of the study sample, have a number of determinants of the financing structure that have a significant effect on the added market value through the mediation of financial leverage and economic value added.
This may be due to the poor performance of those companies during the study period. The researcher found that there are seven companies from the study sample that have negative added economic values, and this indicates that the management was not able to increase the value of the company, and therefore the wealth of shareholders is not optimal, as well as the lack of Any thoughtful decision regarding a combination of debt and equity in the capital formation of the study sample companies, and all of that the study sample companies lost their ability to exploit these determinants in developing the added market value through financial leverage and economic value added.
Keywords: company size, company life, tangibility of assets, growth opportunities, profitability, liquidity, tax exemption, financial leverage, added economic value, added market value.
