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Corporate Capital Structure and Firm Value: A Panel Data Evidence from Australia's Dividend Imputation Tax System

In: Advances In Quantitative Analysis Of Finance And Accounting

Author

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  • Abu Taher Mollik

    (University of South Australia, Australia)

Abstract

This chapter examines the empirical effects of financial leverage (FL) (corporate capital structure) on the market value of a selection of firms listed on the Australian Stock Exchange, developing a direct value-leverage model. Employing a least square dummy variable method to a pooled time-series and cross-sectional data set, the results suggest that the value of a firm rises significantly with FL. More specifically, there is a statistically significant positive effect of total, total interest bearing, and long-term FL on the market value of a firm, suggesting that leverage matters even under the Australia's (full) dividend imputation tax system.

Suggested Citation

  • Abu Taher Mollik, 2008. "Corporate Capital Structure and Firm Value: A Panel Data Evidence from Australia's Dividend Imputation Tax System," World Scientific Book Chapters, in: Cheng-Few Lee (ed.), Advances In Quantitative Analysis Of Finance And Accounting, chapter 11, pages 205-237, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789812791696_0011
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    More about this item

    Keywords

    Hedging Strategies; Expense Mismatching; Stock Split; Trading Volume; Portfolio Optimization; Intraday Patterns; Earnings Management; International Winner-Loser Effect;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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