Capital Structure and Firm Value of Small and Medium Enterprises in the Thai Security Market

Main Article Content

Suree Khemthong
Gallayanee Parkatt

Abstract

The objectives of this research were 1) to study the capital structure and firm value 2) to analyse factors determining the capital structure and 3) to analyse the effect of capital structure on firm value of Small and Medium Enterprises (SMEs) in the Thai Security Market.  This research was quantitative research and focused on the population, all SMEs in the Thai Security Market or all listed companies in the Market for Alternative Investment (MAI). These SMEs or companies had complete information and conformed with the conditions of the study, total 32 companies, 160 data set. The period of the study was 5 years from 1st January 2015 to 31st December 2019.  The research employed descriptive statistics and Panel Data Analysis, Random Effects and Fixed Effects. The results informed that 1) the average of total debt in the SMEs capital structure was 40% while the long-term debt was 8%.  The maximum and the minimum values of total debt in the SMEs capital structure were 98% and 9% while the maximum and the minimum value of long-term debt were 90% and 0% (no long-term debt in the capital structure), respectively.  For the firm value of SMEs, the average of firm values was 1,524,783, 123 Baht while the maximum and the minimum were 7,941,680,092 Baht and 139,731,722 Baht, respectively.  2) Liquidity and asset growth were the important factors determining the capital structure of SMEs in the Thai Security Market.  3) Profitability and firm size had positive effect on firm value while firm age had negative effect with the statistical significance at 0.05 level. In addition, the capital structure had no effect on firm value of SMEs in the Thai Security Market.

Downloads

Download data is not yet available.

Article Details

How to Cite
Khemthong, . S., & Parkatt, G. (2022). Capital Structure and Firm Value of Small and Medium Enterprises in the Thai Security Market. Rajapark Journal, 16(46), 445–464. Retrieved from https://so05.tci-thaijo.org/index.php/RJPJ/article/view/258022
Section
Research Article

References

Aggarwal, D., & Padhan, P. (2017). Impact of Capital Structure on Firm Value: Evidence from Indian Hospitality Industry. Theoretical Economics Letters, 7, 982-1000. https://doi.org/10.4236/tel.2017.74067

Asif, A., & Aziz, B. (2016). Impact of Capital Structure on Firm Value Creation-Evidence from the Cement Sector of Pakistan. International Journal of Research in Finance and Marketing, 6(6), 231-244. https://euroasiapub.org/wp-content/uploads/2016/09 /19FMJune-3764-1.pdf

Ata, H. A., & Ağ, A. G. Y. (2010). Firma karakteristiğinin sermaye yapısı üzerindeki etkisinin analizi. Ekonometri veİstatistik e-Dergisi, (11), 45-60. https://dergipark.org.tr/en/pub/iuekois/issue/8984/112081

Bayrakdaroglu, A., Ege, I., & Yazici, N. (2013). A Panel Data Analysis of Capital Structure Determinants: Empirical Results from Turkish Capital Market. International Journal of Economics and Finance, 5(4), 131-140. http://dx.doi.org/10.5539/ijef.v5n4p131

Brigham, F., & Ehrhardt, C. (2020). Financial Management: Theory and Practice (16th ed.). Thomson Corporation.

Cevheroglu-Acar, M. (2018). Determinants of Capital Structure: Empirical Evidence from Turkey, Journal of Management and Sustainability, 8(1), 31-45. https://doi.org/10.5539/jms.v8n1p31

Chen, J. (2004). Determinants of Capital Structure of Chinese-listed Companies. Journal of Business Research, 57(12), 1341-1351. https://doi.org/10.1016/S0148-2963(03)00070-5

Damodaran, A., (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset (3rd ed.). John Wiley & Sons.

Deesomsak, R., Paudyal, K., & Pescetto, G. (2004). The Determinants of Capital Structure: Evidence from the Asia Pacific Region. Journal of Multinational Financial Management, 14(4), 387-405. http://dx.doi.org/10.1016/j.mulfin.2004.03.001

Dutta, S., Mukherjee, T., & Som, S. (2018). Impact of Financial Leverage on the Value of Firm: Evidence from Some NSE Listed Companies. The BESC Journal of Commerce and Management, 4, 42-52. http://bjcm.bescollege.net/v4/n1/v4n104.pdf

Endri, E. (2018). Determinants of Firm Value: A Case Study of Cigarette Companies Listed on the Indonesia Stock Exchange. International Journal of Managerial Studies and Research, 6(8), 51-59.

Fumani, M., & Moghadam, A. (2015). The Effect of Capital Structure on Firm Value, The Rate of Return on Equity and Earnings Per Share of Listed Companies in Tehran Stock Exchange. Research Journal of Finance and Accounting, 6(15), 50-57.

Gujarati, D., & Porter, D. (2009). Basic Econometrics (5th ed.). McGraw-Hill/Irwin.

Ishari, M.P.S., & Abeyrathna, S.P.G.M. (2016), The Impact of Financial Leverage on Firms’ Value (Special Reference to Listed Manufacturing Companies in Sri Lanka). International Journal of Advancement in Engineering Technology, Management and Applied Science, 3(7), 100-104. https://www.academia.edu/27616985/The_Impact_of_Financial_Leverage_on_Firms_Value_Special_Reference_to_Listed_Manufacturing_Companies_in_Sri_Lanka_

Kester, C. (1986). Capital and Ownership Structure: A Comparison of United States and Japanese Manufacturing Corporations. Financial Management, 15(1), 5-16.

Kontesa, M. (2015). Capital Structure, Profitability, And Firm Value. Whats New?, Research Journal of Finance and Accounting, 6(20), 185-192.

Kuč, V., & Kaličanin, D., (2021). Determinants of the Capital Structure of Large Companies: Evidence from Serbia. Economic Research, 34(1), 590-607. https://doi.org/10.1080/1331677X.2020.1801484

Malinić, D., Denčić-Mihajlov, K., & Ljubenović, E., (2013). The Determinants of Capital Structure in Emerging Capital Markets: Evidence from Serbia. European Research Studies, 16(2), 98-119. https://www.ersj.eu/repec/ers/papers/13_2_p7.pdf

Maneerattanarungrot, C., & Donkwa, K. (2018). Capital Structure Affecting Firm Value in Thailand. ABAC Journal, Assumption University, 38(2), 133-146.

Modigliani, F., & Miller, M. H. (1958). The Cost of Capital, Corporation Finance and The Theory of Investment. American Economic Review, 48(3), 261-297. https://www.jstor.org/stable/1809766

Myers, S. C. (1984). Capital Structure Puzzle. The Journal of Finance, 39(3), 575-592. https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.472.3863&rep=rep1&type=pdf

Myers, S., & Majluf, M. (1984). Corporate Financing and Investment Decisions When Firms Have Information that Investors Do Not Have. Journal of Financial Economics, 13(2), 187-221.

Nursetya, R., & Hidayati, L. (2020). How Does Firm Size and Capital Structure Affect Firm Value?. Journal of Management and Entrepreneurship Research, 1(2), 67-76.

Panova, E. (2020). Determinants of capital structure in Russian small and medium manufacturing enterprises, Equilibrium. Quarterly Journal of Economics and Economic Policy, 15(2), 361-375. https://doi.org/10.24136/eq.2020.017

Parkatt, G., Pamornmast. C., & Thavikitikul, Y. (2021). The Use of Debt in the Capital Structure and Firm Value of Listed Companies in the Market for Alternative Investment, The Journal of Development Administration Research, 11(4), 746-760.

Parkatt, G., Rojanasang, C., Khemthong, S., Meethawornkul, S., & Sittichoksakunchai, P. (2019). Financial Leverage and Return on Equity of Listed Companies in the Market for Alternative Investment. In The 6th National Conference in Management Scient. School of Management Science, Sukhothai Thammathirat Open University.

Purwanti, T. (2020). The Effect of Profitability, Capital Structure, Company Size, and Dividend Policy on Company Value on the Indonesia Stock Exchange. International Journal of Seocology, 1(2), 60-66. https://doi.org/10.29040/seocology.v1i02.9

Serghiescua, L., & Văideanb, V. (2014). Determinant Factors of the Capital Structure of a Firm-an Empirical Analysis. Procedia Economics and Finance, 15, 1447-1457. http://doi.org/10.1016/S2212-5671(14)00610-8

Siripipath, P., & Sakunasingha, B. (2016). Determinants of Capital Structure: A Case Study in Thai Steel Industry. Journal of Global Business Review, 18(1), 1-16.

Sudiyatno, B., Puspitasari, E., Suwarti, T., & Asyif, M. (2020). Determinants of Firm Value and Profitability: Evidence from Indonesia. Journal of Asian Finance, Economics and Business, 7(11), 769-778. https://doi.org/10.13106/jafeb.2020.vol7.no11.769

Wald, K. (1999). How Firm Characteristics Affect Capital Structure: An International Comparison. Journal of Financial Research, 22(2), 161-187. https://doi.org/10.1111/j.1475-6803.1999.tb00721.x