Įmonių kapitalo struktūros modeliavimas finansų rinkos globalizacijos sąlygomis ; The Modeling of Enterprises'Capital Structure under the Conditions of the Financial Market Globalization

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Diana CIBULSKIENĖ THE MODELING OF ENTERPRISES’ CAPITAL STRUCTURE UNDER THE CONDITIONS OF THE FINANCIAL MARKET GLOBALIZATION Summary of Doctoral Dissertation Social Sciences, Economics (04S) 1179 Vilnius 2005 VILNIUS GEDIMINAS TECHNICAL UNIVERSITY Diana CIBULSKIENĖ THE MODELING OF ENTERPRISES’ CAPITAL STRUCTURE UNDER THE CONDITIONS OF THE FINANCIAL MARKET GLOBALIZATION Summary of Doctoral Dissertation Social Sciences, Economics (04S) Vilnius 2005 Doctoral dissertation was prepared at Vilnius Gediminas Technical University in 2001 – 2005 Scientific Supervisor Prof Dr Habil Aleksandras Vytautas RUTKAUSKAS (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S) The Dissertation is being defended at the Council of Scientific Field of Economics at Vilnius Gediminas Technical University: Chairman Prof Dr Habil Romualdas GINEVIČIUS (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S) Members: Prof Dr Habil Algis ŠILEIKA (Institute of Labour and Social Research, Social Sciences, Economics – 04S) Prof Dr Habil Borisas MELNIKAS (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S) Prof Dr Habil Ona Gražina RAKAUSKIENĖ (Mykolas Romeris University, Social Sciences, Economics – 04S) Prof Dr Habil Vidmantas JANKAUSKAS (National Control

Sujets

• Capital structure
• Economics
• EVA

Informations

• Publié par: vilnius_gediminas_technical_university
• Publié le: 01 janvier 2005
• Nombre de lectures: 38

Extrait

 

        Diana CIBULSKIEN           THE MODELING OF ENTERPRISES’ CAPITAL STRUCTURE UNDER THE CONDITIONS OF THE FINANCIAL MARKET GLOBALIZATION         Summary of Doctoral Dissertation Social Sciences, Economics (04S)              

 Vilnius    

2005

1179

 

VILNIUS GEDIMINAS TECHNICAL UNIVERSITY                   Diana CIBULSKIEN           THE MODELING OF ENTERPRISES’ CAPITAL STRUCTURE UNDER THE CONDITIONS OF THE FINANCIAL MARKET GLOBALIZATION           Summary of Doctoral Dissertation Social Sciences, Economics (04S)          

 Vilnius

 

2005

 

Doctoral dissertation was prepared at Vilnius Gediminas Technical University in 2001 – 2005   Scientific Supervisor Prof Dr Habil Aleksandras Vytautas RUTKAUSKAS (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S)   The Dissertation is being defended at the Council of Scientific Field of Economics at Vilnius Gediminas Technical University: Chairman Prof Dr Habil Romualdas GINEVIIUS (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S)   Members: Prof Dr Habil Algis ŠILEIKA of Labour and Social Research, (Institute Social Sciences, Economics – 04S   ) Prof Dr Habil Borisas MELNIKAS (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S) Prof Dr Habil Ona Graina RAKAUSKIEN Romeris (Mykolas University, Social Sciences, Economics – 04S) Prof Dr Habil Vidmantas JANKAUSKAS(National Control Commission for Prices and Energy, Social Sciences, Economics – 04S) Opponents: Prof Dr Habil Leonas SIMANAUSKAS University, Social (Vilnius Sciences, Economics – 04S) Prof Dr Habil Artras KAKLAUSKAS (Vilnius Gediminas Technical University, Social Sciences, Economics – 04S)   The dissertation will be defended at the public meeting of the Council of Scientific Field of Economics in the Senate Hall of Vilnius Gediminas Technical University at 3 p. m. on 21 November 2005. Address: Saultekio al. 11, LT-10223 Vilnius-40, Lithuania Tel.: [phone]; fax [phone], e-mail [e-mail]   The summary of the doctoral dissertation was   distributed on 4 October 2005. A copy of the doctoral dissertation is available for review at the Library of Vilnius Gediminas Technical University (Saultekio al. 14, Vilnius, Lithuania)     © Diana Cibulskien, 2005    

 

 

  VILNIAUS GEDIMINO TECHNIKOS UNIVERSITETAS                   Diana CIBULSKIEN         MONIKAPITALO STRUKTROS MODELIAVIMAS FINANSRINKOS GLOBALIZACIJOS SLYGOMIS           Daktaro disertacijos santrauka Socialiniai mokslai, ekonomika (04S)              

 Vilnius

 

2005

 

Disertacija   rengta   2001   –   2005   metais   Vilniaus   Gedimino   technikos universitete.   Mokslinis vadovas prof. habil. dr. Aleksandras Vytautas RUTKAUSKAS (Vilniaus Gedimino technikos universitetas, socialiniai mokslai, ekonomika – 04S).   Disertacija ginama Vilniaus Gedimino technikos universiteto Ekonomikos mokslo krypties taryboje: Pirmininkas prof. habil. dr. Romualdas GINEVIIUS(Vilniaus Gedimino technikos universitetas, socialiniai mokslai, ekonomika – 04S). Nariai: prof. habil. dr. Algis ŠILEIKA ir socialini (Darbo tyrim institutas, socialiniai mokslai, ekonomika – 04S), prof. habil. dr. Borisas MELNIKAS (Vilniaus Gedimino technikos universitetas, socialiniai mokslai, ekonomika – 04S), prof. habil. dr. Ona Graina RAKAUSKIEN Romerio (Mykolo universitetas, socialiniai mokslai, ekonomika – 04S), prof. habil. dr. Vidmantas JANKAUSKAS (Valstybin kain ir energetikos kontrols komisija, socialiniai mokslai, ekonomika – 04S). Oponentai: prof. habil. dr. Leonas SIMANAUSKAS (Vilniaus universitetas, socialiniai mokslai, ekonomika – 04 S), prof. habil. dr. Artras KAKLAUSKAS Gedimino technikos (Vilniaus universitetas, socialiniai mokslai, ekonomika – 04S).   Disertacija bus ginama viešame Ekonomikos mokslo krypties tarybos posdyje 2005 m. lapkriio 21 d. 15 val. Vilniaus Gedimino technikos universiteto senato posdisalje. Adresas: Saultekio al. 11, LT-10223 Vilnius-40, Lietuva. Tel.: [phone]; faksas [phone], el. paštas [e-mail]   Disertacijos santrauka išsiuntinta 2005 m. spalio 4 d. Disertacij galima perirti Vilniaus Gedimino technikos universiteto bibliotekoje (Saultekio al. 14, Vilnius, Lietuva)   VGTU leidyklos „Technika“ 1179 mokslo literatros knyga     © Diana Cibulskien, 2005

 

 

1. General Characteristic of the Dissertation   The topicality of the scientific problem. interlace of various fields of The enterprise management is as the result of rapid globalization processes. Therefore the present businesses and economic environment need modern and complex instruments for managing enterprises’ financial-economical activities. The problem the enterprises most often face is: what resources to use to finance the activity, so that the goals of the enterprise could be achieved. Various finance resources are associated with a certain costs and risk, the management of which can increase the economic value added (EVA) of an enterprise. This dissertation paper defends a thesis that as the Lithuanian enterprises more actively participate in international contracts, the need for financing grows. In order to minimize possible microeconomic and macroeconomic loss, it is necessary to form the expediente strategy of financing; emphasizing costs of alternatives financial sources under conditions of risk and uncertainty. Analyses conducted in the thesis were sought to contribute both conceptually (by formation of systems and models of capital structure) and practically (by implementation of such systems and models) to financing of companies activities, and to maximizing of EVA. The EVA reveals the dependence of an enterprise’s profitability on the employed capital for gaining that profit. The conceptual need urges to determine the zone of effectiveness of rational capital structure, which stipulates the growth of EVA. The exploration level of scientific problems. A capital structure management problem is analyzed by the theory of capital structure, which is one of the latest fields of finance management theory and has been started to explore only in the 20 th  in the middle of fifties. Scientific literature discusses century, what influences enterprise’s chosen debt level and what capital management solutions should be made in order to reach an effective balance between borrowed and own resources in the structure of the capital. The papers of various authors analyze enterprises’ internal factors, their subjection and influence on capital leverages; into some of them macroeconomic factor are included. Objective of the thesis referring to theoretical methodological aspects – of formation of capital structure to mark the main factors crucially effecting industry enterprises’ capital structure formatting and managing solutions under globalization of finance markets. On the bases of these main factors to form a systemic model of capital structure management oriented towards an effective zone of capital leverages determining the growth of economic value added (EVA). The goals of the scientific research: 1. To analyze theoretical aspects of the development of finance market globalization and its connections with the tendencies of enterprises’ activity globalization in order to asses their effect on enterprises’ capital structure solutions. 5

2. To explore the traditional and the new theories of optimal capital structure by marking their critic evaluations and relevance to current situation. 3. To analyze the level of exploration of capital structure problems in Lithuania and other countries by highlighting the problems and results of these scientific-empiric studies. To propose a systemic model allowing to highlight a set of factors and to assess the level of their influence on finance recourse indraught policy. 4. To apply the created systematic model of capital leverage management in Lithuanian manufacturing enterprises. 5. To compose and practically apply the model allowing formatig a financing policy according to the effectiveness zone of rational capital structure levers determining the growth of EVA, while assessing the uncertainty of proportions and reliability of possible results and referring it to risk management conception. The subject of thesis manufacturing enterprises’ capital leverages and – their determinant factors. The main scientific hypothesis: the extent of enterprises’ economic value added (EVA) grows within a certain interval of capital structure, where marginal effectiveness decreases as the proportion of debt increases. Methodology and scheme of research:for determination of capital leverages as integrated values the mathematical modeling methods such as correlation analysis, multiple regression models were used. For composition of model of capital structure management imitative modeling elements were used. Research data was summarized and processed using Microsoft Excel and SPSS computer programs. In this dissertation the following data recourses were used: analytical and statistical data of the Department of statistics of the Republic of Lithuania, analytic material of Lithuanian and foreign science organizations, publications in periodic science editions by Lithuanian and foreign scientists, analytics and experts. Novelty and theoretical significance of scientific researches.Scientific relevance of the dissertation is the main results of the scientific study presented for public maintenance. First, one studied adequate motives under Lithuanian conditions that encourage enterprises to study the substantiation of capital structure formation. The preconditions and criteria affecting the financing decisions of Lithuanian enterprises were conceptually grounded while stressing the aspects of finance market globalization. Second, the systemic capital leverage management model was created; involves the three main ranges that affect enterprises’ activity: internal enterprise’s activity criteria, country’s macro- economic factors and finance market globalization factors. This model allows extracting the main criteria determining the formation of enterprises’ capital leverages. Third, one has created and practically applied the model of formation of rational capital structure oriented towards the increase of the economic value added. This model enables to project the capital structure formation solutions 6

according to the uncertainty of the posibilities and ensuring the reliability of the planned results. One conceptually introduced the effective optimal capital structure zone where financing solutions allow creating the biggest economical value added. Practical significance of the work and the purpose of the results. The made capital structure formation model was introduced, that includes the studies of internal and external environment of an enterprise and is oriented towards the increase of an enterprise’s economical value-added, and enables to assess the financing alternatives according to the advantages and risk of the chosen financing recourse. The application of the created model, scientific and practical results of the work help to highlight the internal factors, stress the main macro economical and global factors of finance markets that affect the inefficiency of enterprises’ activity determined by financing solutions. The practical application of this model in taking financing solutions gives an opportunity to integrally assess future selection opportunities and distribution. Possible further scientific, empiric researches. A background for future scientific studies that may be directed towards dynamic capital structure formation based on wider analysis of finance market globalization factors and situation of country’s economical situation, linked to the trends of internalization of product and other markets, paying more attention to capital management and formation solutions in international companies designed for creation of economical value-added. Work approbation. The results of the work are introduced in 17 scientific articles, including 6 articles in reviewed periodic scientific publications in Lithuania, one in foreign scientific journal. During the doctoral studies some reports were made at Lithuanian and international conferences and during the lecturers’ mobility visits to the University of Kassel (Germany). Structure of the thesis. The scientific work consists of introduction, three parts, conclusions and proposals, a list of literature sources and annexes.   2. Methodological aspects of enterprises’ capital structure management   The impact of finance market globalization on capital structure formation decisions.of globalization emerged as a characteristics of economics’The term transnational functioning and information under conditions of unrestricted national borders. Scientific literature discusses upon the interaction of globalization processes. Globalization of enterprise’s activities is a global integration of national and international enterprises, based on state-encouraged liberalization and development of information technologies. Enterprises are affected by the globalization and trends of certain branch- associated markets to which an enterprise must react by changing its action strategy and structure. On the other hand, enterprises are the actors of economy globalization, actively influencing this process.It is suggested that globalization 7

is directly formed by enterprises and not by other market members. This proposition points that namely enterprises may be described as the engines of globalization processes. They extremely react not only to the globalization, but also causes and shapes it in the level of a branch, market, macro-economy and global economy. Economy globalization institutions “ market” and “enterprise” are dominant objects of globalization. A process of finance market and enterprises’ activity globalization significantly influences not only the choices of enterprise activities, but also enterprises’ capital structure management solutions that determine the scope of enterprise’s effectiveness and growth opportunities. Globalization gives an opportunity for enterprises to exploit various new financing possibilities that stimulate to appropriately change and manage a capital structure. The aspects of finance market globalization are significant to the capital structure solutions in the matter of enterprises are no longer a market object acting inside a country. The mentioned aspects are affected by international markets including finance markets encouraging enterprises to expand their activity and to adjust to changing market conditions. Capital structure solutions as a decision problem in a modern financing theory.   In order to recognize and highlight the formed scientific problem in the theoretic discussions and appearances, an analysis of capital structure theory genesis was made that formulated constructed assessments of conceptive statements. Optimal capital structure studies allow distinguishing the two elementary study fields from the modern financing theory: neoclassical and neo- institutional suggestions. Neoclassical models only in-partly include specific economical intercourse. While distinguishing the existence of financial agents and choosing financing instruments with different controlling and informing rights some specific financing problems are formed. On the basis on this inadequacy a neo-institutional view towards this phenomenon emerged. Generally it analyses costs and benefits of establishing an enterprise. An existence of institutions is based on information asymmetry that comes up between the partners of an agreement. Therefore is may be suggested that the researches of optimal capital structure must be extended whith: making enterprise’s financing solutions according to the costs and profitability of equity and debt capital. In that case a capital structure is interpreted as enterprise’s individual multi-criteria function that is determined by payable tax sums, insolvency costs, equity and debt capital agent and transaction costs. There are several factors for monitoring or measuring these criteria and also for determination of their interaction and influence on capital structure.    Methodological aspects of an intercourse between economic profit and capital structure.Given globalization processes in markets business is assessed not only according to traditional financial indicators or a profit gained. A concept – global company – popular in scientific literaturemeans that an enterprise not only gains high profits, receives large cash flows, but also keeps its organization process of resource usage on global level. Enterprises use the resources to 8  

execute their activities: human capital and financial capital (equity and debt). Sales show the value an enterprise gave to its customers. A difference between sales and value of recourses used for production and production process costs is a value created that covers human capital costs and financial capital costs. All that is left after covering the listed costs is called economic profit and is expressed the size of economic value added (EVA). Consequently: SEVA f S f K f, where: S – sales, K - capital. This formula shows that EVA is a parabolic function counting dependence according to the structure of sales and capital. EVA, while integrating earnings before taxes and interest, operating cash-flows and capital costs, more precisely reflects enterprise’s financial situation in comparison to other traditional indicators of net profit or operating cash flows. By taking in account equity costs, EVA clearly reveals the relation between exploited capital and profitability and therefore is appropriate for grounding investing decisions and for detecting their influence on final results. An implemented EVA managerial system helps to faster and more effectively make solutions of tactic and operative level.   3. Modeling of enterprises’ capital structure solutions   The mathematical background for formation of capital structure management model.main models and procedures of capital In this section the structure formation quantitative assessment are analyzed; their comparative analysis (about regression, multiple regression, correlation coefficients, other statistical test; forecasting models, etc.) is introduced. The validity of empiric capital structure studies for model formation.Here selection and evaluation of main criteria effecting solutions of capital structure optimization problems are introduced; this evaluation includes the analysis of empiric studies and models created by various authors from different countries. The analysis reflects the main presumptions for creating industrial enterprises’ capital structure management model in developing economy countries and under rapid processes of financial market globalization. Studies in various countries in most cases sustain classical models of capital structure formation. Because of the different statistical (different periods of time and numbers of observations) and financial (different systems of accounting, reporting and legal norms) data bases some result comparison problems occur. However in general features similar tendencies are noticed. Financial market globalization factors that may affect enterprises’ capital structure formation solutions have not been analyzed separately in scientific literature. In this case it’s purposive to study the third group of the factors – financial market globalization factors that are actual for most industrial enterprises not only in international but also in national markets. Consequently the formation and management of capital structure is a complex stochastic decision process that depends on various factors of enterprises internal 9

activity, national and international activity and on other enterprises’ decisions. During this process some in-depth studies must be made that could base enterprise’s future solutions allowing fulfillment of the purposes of an enterprise and other determinant groups. The structure of capital structure management solution model. Here the capital structure formation solution indicators are presented, and the algorithm of their intercourse and assessment procedures. Basing on systemized and summarized results of theoretic and empiric studies one form a logic model of empiric study that includes all the three factor environments of capital structure solutions and their relation analysis. For the research are selected three dependet variables, they reflect the capital structure solutions the most clearly: the long time liabilities-owned capital ratio named as a financial lever coefficient LR1; debt ratio – LR2; debt-equity ratio – LR3. Accordingto above mentioned assumptions a general model of multiple regression is formed: K LR it   i0    ik X kt   it ,   k1 h where:LR it  – enterprises’i t  leverage ratio in t period;X  kt  matrix of capital – structure factorsk= 1, …,nintperiod; i0 – the constant ofi th leverage ratio; ik   – the matrix ofi th  leverage ratios coefficientsk=1, ...,n; it  the matrix of – random independent variables not included in the regression model. The significance of enterprises’ specific internal factors.One here describes internal environment analysis methods and procedures that according to results of theoretic studies include the identification of enterprises’ purpose and strategy, determination of capital demand and financial deficit, selection of possible resource exploitation alternatives and distinguishing of specific factors. Basing on the made scientific studies in the world and Europe one selects internal factors affecting capital structure formation solutions (Table 1).   Table 1.The description of internal indicators Indicator Marking Calculation formula Tangibility of assets TM TM = All Liabilities / Asset Size of an enterprise ID ID = LN (Sales) Profitability of equity P P = EBIT / Equity Growth factor AV AV = (Sales t – Sales t   -1 ) / Sales. t-1   Tax ratio T T=Taxes/EBIT Financial deficit DEF DEF =Debt +Equity Bankruptcy risk Z Altman’s ratio of bankruptcy probability Source: made by the author according to the theoretical discussions   According to the specific factors analyzed earlier is formed a multiple regression model based on formula. 10