Product diversification and capital structure: A case of industrial firms listed in the Philippine Stock Exchange (2003-2012)

Date of Publication

2014

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Management of Financial Institutions

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management

Thesis Adviser

Kenneth Lagman Yumang

Defense Panel Chair

Esperanza Joven

Defense Panel Member

Tyrone Chan Pao

Martin Temblique

Junette A. Perez

Kenneth Lagman Yumang

Abstract/Summary

In analyzing factors influencing capital structure, this paper primarily aims to determine the relationship of product diversification, both related and unrelated strategies, on the financial decisions using a panel data analysis for a sample including 38 publicly listed industrial firms in the Philippines during the period 2003-2012. The findings have implicated that effect on leverage may vary according to the degree of product diversification. Specifically, a related diversification strategy is associated with higher debt usage, while unrelated diversification strategy has insignificant relationship with corporate leverage. The slow adjustment speed towards the target debt level among sample firms implies the presence of high transaction and adjustment costs that could have hindered the utilization of the greater debt capacity which may have been created from diversification, as explained by the coinsurance theory.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU17151

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

84 leaves : illustrations ; 28 cm.

Keywords

Financial institutions--Management; Diversification in industry--Philippines

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