№ 12/2016

Fìnansi Ukr. 2016 (12): 105–0

FINANCES OF THE INSTITUTIONAL SECTORS

TSYGANOV Sergii , ZALISKO Olga

Empirical analysis of capital structure of modern transnational corporations

The authors investigate the impact of capital structure on the financial leverage of modern transnational corporations (TNCs). Based on the empirical test of 73 largest TNCs from nine economic sectors according to data for the period 2000—2014, it is found that TNCs in different areas have different levels of leverage. The highest average value for the debt ratio is observed in the wholesale trade, the lowest — in the oil industry. On the basis of correlation analysis it is proved that the effect of financial leverage is the strongest and most common within the impact of debt and long-term debt ratios on the return on assets and net income. It is grounded that, all things being equal, for the analysis of financial leverage it is advisable to use the debt ratio. The study shows that the effect of financial leverage is largely inverse. This includes the impact on the profitability of equity, assets and net income. This pattern is typical for all investigated areas. It is established that the capital structure of the analyzed TNCs has an optimum level, which was reached during the period in question. The above is confirmed, first, by statistically proven inverse effect of financial leverage; secondly, by the sustainability of the debt ratio; thirdly, by much greater variation of short-term ratios compared with the overall and long-term ones; fourthly, by low values of a small number of positive correlations. Average variations of the debt ratio are small in absolute terms. For seven of the nine industries studied the variation of the debt ratio is the lowest among the considered.

Keywords:TNC capital structure, TNC financial leverage, equity, loan capital, optimal capital structure, high significant correlation, debt ratio.

JEL: D24, E22, F21.

TSYGANOV S. . Empirical analysis of capital structure of modern transnational corporations / S. TSYGANOV, O. Zalisko // Фінанси України. - 2016. - № 12. - C. 105-0.

Article original in Ukrainian (pp. 105 - 123)

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