IDEAS home Printed from https://ideas.repec.org/a/jfr/afr111/v9y2020i2p46.html
   My bibliography  Save this article

Firms’ Financing Choices and Profitability in the For-Profit Education Industry: An Empirical Survey of Education Companies Listed on the NYSE and NASDAQ Stock Markets

Author

Listed:
  • Andrea Quintiliani

Abstract

This study seeks to understand financing choices and its relationships with profitability of for-profit education companies listed on NASDAQ and NYSE. This study tests the hypothesis that knowledge-based firms with higher assets intangibility used less debt in their capital structures than capital-intensive firms with higher assets tangibility. Capital structure theory is a useful framework to explain research findings. Tests were conducted on a sample consisting of education companies and capital-intensive firms listed on NASDAQ and NYSE during the period 2000-2018. Data collected by Zacks Premium database were submitted to regression analysis. Findings suggest that capital-intensive firms have higher debt ratios than education companies. Also, this study finds existence of a strong inverse relationship between profitability and the amount of debt in the capital structure of capital-intensive firms while no such relationship was found between these two variables for the education companies. This study’s findings could provide valuable information to policymakers and investors to identify suitable financing policies in the for-profit education industry. Findings can also be useful to stimulate debate on the role of equity financing to supporting growth policies of for-profit education industry. This study attempts to fill the absence of empirical studies on financial policies of for-profit education firms.Contribution/ Originality- The main contribution of this study is that it will increase knowledge about funding able to sustain for-profit education firm's growth. Furthermore, this study tries to fill the lack of studies who investigate explicitly (empirically or theoretically) funding policies of for-profit education firms.

Suggested Citation

  • Andrea Quintiliani, 2020. "Firms’ Financing Choices and Profitability in the For-Profit Education Industry: An Empirical Survey of Education Companies Listed on the NYSE and NASDAQ Stock Markets," Accounting and Finance Research, Sciedu Press, vol. 9(2), pages 1-46, May.
    • Handle: RePEc:jfr:afr111:v:9:y:2020:i:2:p:46
    as

    Download full text from publisher

    File URL: https://www.sciedupress.com/journal/index.php/afr/article/download/17579/10891
    Download Restriction: no
    File URL: https://www.sciedupress.com/journal/index.php/afr/article/view/17579
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Manohar Singh & Sheri Faircloth, 2005. "The impact of corporate debt on long term investment and firm performance," Applied Economics, Taylor & Francis Journals, vol. 37(8), pages 875-883.
    2. Philippe Aghion & Stephen Bond & Alexander Klemm & Ioana Marinescu, 2004. "Technology and Financial Structure: Are Innovative Firms Different?," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 277-288, 04/05.
    3. Harris, Milton & Raviv, Artur, 1991. "The Theory of Capital Structure," Journal of Finance, American Finance Association, vol. 46(1), pages 297-355, March.
    4. H. Kent Baker & Samir Saadi & Shantanu Dutta & Devinder Gandhi, 2007. "The perception of dividends by Canadian managers: new survey evidence," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 3(1), pages 70-91, January.
    5. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    6. Rahim Bah & Pascal Dumontier, 2001. "R&D Intensity and Corporate Financial Policy: Some International Evidence," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 28(5‐6), pages 671-692, June.
    7. Rahim Bah & Pascal Dumontier, 2001. "R&D Intensity and Corporate Financial Policy: Some International Evidence," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 28(5-6), pages 671-692.
    8. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    9. repec:bla:jfinan:v:43:y:1988:i:1:p:1-19 is not listed on IDEAS
    10. Malcolm Baker & Jeffrey Wurgler, 2002. "Market Timing and Capital Structure," Journal of Finance, American Finance Association, vol. 57(1), pages 1-32, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giorgio Canarella & Stephen M. Miller, 2019. "Determinants of Optimal Capital Structure and Speed of Adjustment: Evidence from the U.S. ICT Sector," Working papers 2019-06, University of Connecticut, Department of Economics.
    2. Namryoung Lee & Jaehong Lee, 2019. "External Financing, R&D Intensity, and Firm Value in Biotechnology Companies," Sustainability, MDPI, vol. 11(15), pages 1-18, July.
    3. Hamadi FakhFakh & Rim Zouari-Hadiji, 2011. "Dettes financières et investissement en R&D:une étude comparative," Working Papers CREGO 1110302, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    4. Hsiang-Lan Chen & Wen-Tsung Hsu & Yen-Sheng Huang, 2010. "Top management team characteristics, R&D investment and capital structure in the IT industry," Small Business Economics, Springer, vol. 35(3), pages 319-333, October.
    5. Drobetz, Wolfgang & Pensa, Pascal & Wöhle, Claudia B., 2004. "Kapitalstrukturtheorie in Theorie und Praxis: Ergebnisse einer Fragebogenuntersuchung," Working papers 2004/09, Faculty of Business and Economics - University of Basel.
    6. Thi Hong Hoang & Călin Gurău & Amine Lahiani & Thuy-Luu Seran, 2018. "Do crises impact capital structure? A study of French micro-enterprises," Small Business Economics, Springer, vol. 50(1), pages 181-199, January.
    7. Rana El Bahsh & Ali Alattar & Aziz N. Yusuf, 2018. "Firm, Industry and Country Level Determinants of Capital Structure: Evidence from Jordan," International Journal of Economics and Financial Issues, Econjournals, vol. 8(2), pages 175-190.
    8. Sjur Westgaard & Amund Eidet & Stein Frydenberg & Thor Christian Grosås, 2008. "Investigating the Capital Structure of UK Real Estate Companies," Journal of Property Research, Taylor & Francis Journals, vol. 25(1), pages 61-87, August.
    9. Wu, Xueping & Au Yeung, Chau Kin, 2012. "Firm growth type and capital structure persistence," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3427-3443.
    10. Le, Thi Phuong Vy & Phan, Thi Bich Nguyet, 2017. "Capital structure and firm performance: Empirical evidence from a small transition country," Research in International Business and Finance, Elsevier, vol. 42(C), pages 710-726.
    11. Mueller, Elisabeth & Zimmermann, Volker, 2006. "The Importance of Equity Finance for R&D Activity: Are There Differences Between Young and OldCompanies?," ZEW Discussion Papers 06-014, ZEW - Leibniz Centre for European Economic Research.
    12. Ömer Tuğsal Doruk, 2024. "The Link Between R&D and Financing Constraints in Manufacturing Sectors for Two Emerging Markets," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 12596-12621, September.
    13. W. Allard Bruinshoofd & Leo de Haan, 2012. "Market timing and corporate capital structure: a transatlantic comparison," Applied Economics, Taylor & Francis Journals, vol. 44(28), pages 3691-3703, October.
    14. Xu, Jin, 2012. "Profitability and capital structure: Evidence from import penetration," Journal of Financial Economics, Elsevier, vol. 106(2), pages 427-446.
    15. Katarzyna Predkiewicz & Marek Pauka & Paweł Predkiewicz, 2021. "IPO Success of High-Technology Companies," European Research Studies Journal, European Research Studies Journal, vol. 0(3 - Part ), pages 799-816.
    16. Degryse, H.A. & de Goeij, P. C. & Kappert, P., 2009. "The Impact of Firm and Industry Characteristics on Small Firms' Capital Structure : Evidence from Dutch Panel Data," Discussion Paper 2009-21, Tilburg University, Center for Economic Research.
    17. Ampenberger, Markus & Schmid, Thomas & Achleitner, Ann-Kristin & Kaserer, Christoph, 2009. "Capital structure decisions in family firms: empirical evidence from a bank-based economy," CEFS Working Paper Series 2009-05, Technische Universität München (TUM), Center for Entrepreneurial and Financial Studies (CEFS).
    18. McGuinness, Paul B., 2021. "Board member age, stock seasoning and the evolution of capital structure in Chinese firms," International Business Review, Elsevier, vol. 30(3).
    19. Ramona Westermann, 2018. "Measuring Agency Costs over the Business Cycle," Management Science, INFORMS, vol. 64(12), pages 5748-5768, December.
    20. Alnori, Faisal & Alqahtani, Faisal, 2019. "Capital structure and speed of adjustment in non-financial firms: Does sharia compliance matter? Evidence from Saudi Arabia," Emerging Markets Review, Elsevier, vol. 39(C), pages 50-67.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:afr111:v:9:y:2020:i:2:p:46. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sciedu Press (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.