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http://dx.doi.org/10.5394/KINPR.2016.40.6.451

The Effects of Economic Conditions on Capital Structure : Evidence from Korean Shipping Firms  

Lee, Sung-Yhun (School of Port and Logistics, Kaya University)
Publication Information
Journal of Navigation and Port Research / v.40, no.6, 2016 , pp. 451-458 More about this Journal
Abstract
Since Modigliani and Miller developed their theory of capital structure in 1958, it has become one of the most debated issues in corporate management. This is because the capital structure decision necessarily affects financial risk and the firm's value. Throughout the research, one of the most concerning problems is determining what factors influence the firm's capital structure. Since Korean shipping firms have been suffering from a long term economic recession, an optimal capital structure has become increasingly critical to survive in the shipping industry. This paper studies panel data on 46 Korean shipping companies since 2000 to find the factors that affect capital structure. The results suggest that a negative relationship arises between firm size, tangible assets, profitability and non-debt tax shields against leverage. Otherwise, it proved that growth opportunity has a positive relationship with the firm's leverage. In the research model during a booming shipping economy, growth opportunity and non-debt tax shield are not associated with firm's capital structure.
Keywords
Korean Shipping Company; Capital Structure; Pecking Order Theory; Trade off Theory; Leverage;
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Times Cited By KSCI : 5  (Citation Analysis)
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