Corporate Restructure
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International Journal of Business and Management
January, 2009
Corporate Restructuring, Firm Characteristics and Implications on Capital Structure: an Academic View
Maran Marimuthu Department of Finance Faculty of Accounting and Management Tunku Abdul Rahman University Kajang 40000, Selangor DE, Malaysia Tel: 60-3- 9019-4722
Abstract
E-mail: maran@mail.utar.edu.my
The fundamental reason for carrying out corporate restructuring is to further enhance the long-term survival of firms through greater efficiency and cost-effectiveness. As a result, firms are bound to conduct financial restructuring as part of their corporate restructuring program. This involves some adjustment on their capital structure as there is a need to have changes on either their debt proportions or equity proportions. This article explores certain critical areas of capital structure. The argument here is based on the life cycle of a company, firm specific characteristics and type of business dimensions. This study also offers a conceptual understanding on capital structure in a given set of factors/variables. It is also postulated here that researchers should look into the possibility of remodeling their work on capital structure.
Keywords: Corporate restructuring, Firm characteristics, Capital structure 1. Introduction
Corporate restructuring has undoubtedly become a major program for many organizations as it paves ways for greater efficiency and cost-effectiveness. Both corporate and business strategies are currently integrated into restructuring program to yield greater financial performance in both short and long run. The general framework for corporate restructuring comprises of reorganization of assets (acquisitions and sell-offs), creating new ownership (spin-offs, split-ups and equity carve-outs), reorganizing financial claims (exchange offers, leveraged recapitalization, financial reorganization and liquidation) and other strategies (eg joint ventures, LBOs, etc)...
January, 2009
Corporate Restructuring, Firm Characteristics and Implications on Capital Structure: an Academic View
Maran Marimuthu Department of Finance Faculty of Accounting and Management Tunku Abdul Rahman University Kajang 40000, Selangor DE, Malaysia Tel: 60-3- 9019-4722
Abstract
E-mail: maran@mail.utar.edu.my
The fundamental reason for carrying out corporate restructuring is to further enhance the long-term survival of firms through greater efficiency and cost-effectiveness. As a result, firms are bound to conduct financial restructuring as part of their corporate restructuring program. This involves some adjustment on their capital structure as there is a need to have changes on either their debt proportions or equity proportions. This article explores certain critical areas of capital structure. The argument here is based on the life cycle of a company, firm specific characteristics and type of business dimensions. This study also offers a conceptual understanding on capital structure in a given set of factors/variables. It is also postulated here that researchers should look into the possibility of remodeling their work on capital structure.
Keywords: Corporate restructuring, Firm characteristics, Capital structure 1. Introduction
Corporate restructuring has undoubtedly become a major program for many organizations as it paves ways for greater efficiency and cost-effectiveness. Both corporate and business strategies are currently integrated into restructuring program to yield greater financial performance in both short and long run. The general framework for corporate restructuring comprises of reorganization of assets (acquisitions and sell-offs), creating new ownership (spin-offs, split-ups and equity carve-outs), reorganizing financial claims (exchange offers, leveraged recapitalization, financial reorganization and liquidation) and other strategies (eg joint ventures, LBOs, etc)...