Accounting Factors Affecting the Capital Structure in the Asian Economic CommunityMatthias Nnadi*
Department of Business Education, Rivers State University of Science and Technology, Port Harcourt, Nigeria
- *Corresponding Author:
- Matthias Nnadi
Assistant Lecturer, Department of Business Education
Rivers State University of Science and Technology
Port Harcourt, NIGERIA
Tel: +234 903 885 8167
E-mail: [email protected]
Received Date: May 21, 2016; Accepted Date: October 14, 2016; Published Date: October 20, 2016
Citation: Nnadi M (2016) Accounting Factors Affecting the Capital Structure in the Asian Economic Community. Int J Account Res 4: 139. doi:10.4172/2472-114X.1000139
Copyright: © 2016 Nnadi M. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
This paper investigates the accounting factors that affect capital structures in the ASEAN Economic Community consisting of listed firms in the primary stock markets in Indonesia, Malaysia, the Philippines, Singapore and Thailand. Capital structures are defined by total debt to capital and long-term debt to capital ratios. Tangibility, profitability, firm size, earnings per share and growth are used to study firm-specific effects. Moreover, interest rates and country dummy variables are included to observe country-specific effects in this region. The results suggest that tangibility, profitability and size are robust and consistent throughout the period. The significant positive relationship between growth and leverage can be explained by non-monotonic behavior. Managers’ financing decisions are based on the cost of financing rather than maintaining their high EPS. According to the results, trade-off theory explained most of the relationships with capital structure.