Use this URL to cite or link to this record in EThOS: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.482954
Title: Changes in the financing behaviour of companies in the U.K : 1972-82
Author: Adedeji, T. A.
Awarding Body: Manchester Business School
Current Institution: University of Manchester
Date of Award: 1986
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Abstract:
This study examines three aspects of financing of companies, namely, leases, debt and dividends. Part of the main objectives of the study are to determine whether th~re is a relationship between leasing and the tax paying positions of companies, and whether leases displace debt. The evidence observed by the study suggests that there is no relationship between leasing and the tax paying positions of companies. The evidence also suggests that leases displace only a very small amount of debt. Some other indications from the evidence are that companies that use leases are not significantly different from those that do not use leases in terms of earnings (before tax and after tax), industries, size or debt ratios (before adjusting for leases). However, after adjusting for leases, the debt ratios of companies that use lease finance are significantly greater than the debt ratios of companies that do not use lease finance. Moreover, there are indications that size has a significant negative influence on the use of leases. We speculate that the size influence is probably an indication that bigger companies have better access to the capital markets. Some of the other main objectives of the study are to determine the pattern of changes in debt over the period 1972-82, and also determine whether the changes are explained by the extant finance theory. The propositions tested in the study are derived mainly from the Myers' theory and the signaling theory. The study also tests a proposition by Marsh and another proposition by Stapleton. Generally, the evidence observed suggests that most companies have decreases in the value of the total debt ratio over the period. It also appears from the evidence that most companies have a decrease in the ratio because they cut down the amount of borrowed funds, particularly short term debt, that they use. The evidence further indicates that there is no influence of industry or size on changes 1n the value of the ratio over the study period. But the evidence does not give much support to the prediction of any of the propositions. Also, the study examines the pattern of changes in dividends between 1972-82 and tries to determine whether the changes are eXplained by the signaling theory. Evidence observed suggests that most companies have a decrease 1n the value of the dividend payout ratio over the study period. The evidence also suggests that the changes are only weakly explained by the signaling theory. Then, the study tries to determine whether there are significant interactions between changes in dividends, debt and investment. Very briefly, the evidence observed suggests that there are interactions between the variables. Further to that, an attempt is made to determine whether there are Granger's causal relationships between changes in dividends, debt and investment. The evidence observed suggests that there 1s no Granger's ceusel relationship between changes in financing end investment. Finally, the study discusses the implications of the evidence observed for public policies and also mekes suggestions for further studies.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.482954  DOI: Not available
Keywords: Economics & economic theory Economics
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