Variables that sway the capital structure! Evidence from the US automotive industry

Figures & data

Table 1. Explanation of variables

Type of variable	Variables
Dependent variable	Total debt ratio (TD)
	Long-term debt ratio (LD)
	Short-term debt ratio (SD)
Independent variables	Sales growth (SG)
	Firm size (S)
	Profitability of firm (Pr)
	Tangibility ratio (Tr)

Note: Table 1 presents a set of dependent and independent variables. TD means the total debt ratio, LD means the long-term debt ratio, SD means short-term debt ratio, SG means sales growth, S means size of the firm, Pr means the firm’s profitability, and Tr means the tangibility ratio. The study period is 2011–2022.

Table 2. Descriptive statistics

Variables	Observations	Mean	Standard deviation(Std. dev.)	Min.	Max.	Pr (Skewness)	Pr (Kurtosis)
Total debt ratio (TD)	670	0.76	4.28	0.00	71.58	0.00	0.00
Long-term debt ratio (LD)	670	0.22	0.59	0.00	13.78	0.00	0.00
Short-term debt ratio (SD)	670	0.54	3.92	0.00	57.80	0.00	0.00
Sales growth (SG)	670	0.55	2.64	−6.90	21.43	0.00	0.00
Firm size (S)	670	19.98	3.40	8.77	26.31	0.00	0.12
Profitability of firm (Pr)	670	−0.55	2.97	−50.83	0.29	0.00	0.00
Tangibility ratio (Tr)	670	0.43	0.19	0.00	1.00	0.05	0.15

Note: Table 2 reports the descriptive statistics. The descriptive statistics represents the mean, standard deviation, minimum value, maximum value of the set of selected variables with the skewness and kurtosis. TD means the total debt ratio, LD means the long-term debt ratio, SD means short-term debt ratio, SG means sales growth, S means size of the firm, Pr means the firm’s profitability, and Tr means the tangibility ratio. The study period is 2011–2022.

Table 3. Correlation among the variables

Variables	TD	LD	SD	SG	S	Pr	Tr
TD	1
LD	0.6514*	1
SD	0.9934*	0.5603*	1
SG	−0.0045	0.001	−0.005	1
S	−0.3128*	−0.1194*	−0.3235*	−0.0794	1
Pr	−0.7091*	−0.3784*	−0.717*	−0.022	0.4226*	1
Tr	−0.0637	0.0537	−0.0777	0.0631	0.2849*	0.067	1

Note: Table 3 reports the correlation results of coefficients based on Pearson’s pairwise correlation test. TD means the total debt ratio, LD means the long-term debt ratio, SD means short-term debt ratio, SG means sales growth, S means size of the firm, Pr means the firm’s profitability, and Tr means the tangibility ratio. *Statistically significant at 5% level. The study period is 2011–2022.

Table 4. VIF results

Variables	SG	S	Prft	Tr	Mean VIF
VIF	1.01	1.34	1.22	1.1	1.17
1/VIF	0.99	0.75	0.82	0.91

Note: Table 4 reports the Variance Inflation Factor (VIF) that measures the severity of multicollinearity in regression analysis. The results indicate that the independent variables have no multicollinearity. SG means sales growth, S means size of the firm, Pr means the firm’s profitability, and Tr means the tangibility ratio

Table 5. Unit root analysis

Variables	p-Value	Inference
Augmented Dickey-Fuller
Total debt ratio (TD)	0.00	Stationary
Long-term debt ratio (LD)	0.00	Stationary
Short-term debt ratio (SD)	0.00	Stationary
Sales growth (SG)	0.00	Stationary
Firm size (S)	0.00	Stationary
Profitability of firm (Pr)	0.00	Stationary
Tangibility ratio (Tr)	0.00	Stationary

Note: Table 5 reports the unit root analysis. As the p-value is <0.05, the series has no unit roots; thus, we conclude that the series are stationary.

Table 6. Regression results

Independent variables	Dependent variables
	Fixed effects				Independent variables	Random effects
	Total debt ratio (TD)		Short-term debt ratio (SD)			Long-term debt ratio (LD)
	No dummy	Covid dummy	No dummy	Covid dummy		No dummy	Covid dummy
Sales growth (SG)	−0.03	−0.031	−0.017	−0.018	Sales growth (SG)	−0.005	−0.005
	(0.024)	(0.024)	(0.024)	(0.024)		(0.005)	(0.006)
Firm size (S)	0.288	0.311	0.285	0.3	Firm size (FS)	0.003	0.004
	(0.276)	(0.285)	(0.228)	(0.235)		(0.015)	(0.015)
Profitability of firm (Pr)	−.836***	−.839***	−.765***	−.767***	Profitability of firm (Prft)	−0.073	−0.073
	(0.297)	(0.297)	(0.243)	(0.243)		(0.065)	(0.065)
Tangibility ratio (Tr)	−2.257	−2.261	−2.336	−2.339	Tangibility ratio (Tr)	0.179	0.178
	(1.953)	(1.955)	(1.635)	(1.636)		(0.203)	(0.204)
Observations	670	670	670	670	Observations	670	670
R-squared	0.482	0.482	0.501	0.501	Pseudo R^2	.z	.z
Durbin–Watson	0.706764	0.706537	0.7442382	0.744178	Durbin–Watson	1.967096	1.966055
Hausman test (Prob > chi2)	0.0018	0.0018	0.0001	0.0001	Hausman test (Prob > chi2)	0.6081	0.6081

Note: Table 6 represents the panel data regression results. TD means the total debt ratio, LD means the long-term debt ratio, SD means short-term debt ratio, SG means sales growth, S means size of the firm, Pr means the firm’s profitability, and Tr means the tangibility ratio. The Hausman test indicates the fixed effect to be the best regression measure w.r.t. TD and SD and random effect to be the best regression measure w.r.t. LD. The standard errors are in parentheses. *** p < .01, ** p < .05, * p < .1 reflects the statistical significance. The study period is 2011–2022.

***p < .01, **p < .05, *p < .1.