Dependent variables used:

LTDRA - Long Term Debt is divided by Total Assets.

STDRA - Short Term Debt is divided by Total Assets.

TDRA - Total Debt is divided by Total Assets.

Independent variables used:

Pro (Profitability) - Earnings Before Interest and Tax are divided by Total Assets.

Tax - Tax paid is divided by Net Income.

Size - is calculated with natural logarithm of Assets or Sales.

Tan (Tangibility) - is calculated by dividing the Fixed Assets by Total Assets.

The estimated model is:

LTDRA = + в1Profitability + в2Tax + в3Size + в4Tangibility + ?

STDRA = + в1Profitability + в2Tax + в3Size + в4Tangibility + ?

TDRA = + в1Profitability + в2Tax + в3Size + в4Tangibility + ?

Where:

= constant of the regression equation

в1, в2, в3 and в4 = coefficients of Profitability, Tax, Company size and Tangibility

? = is the error term that indicates the sum of the unobserved effects and idiosyncratic error term.

Standard errors are presented in parenthesis.

Correlation matrixes for both countries:

Table: 8

Correlation coefficients, using the observations 2010 - 2018 (UZB)

	PROF	TAX	SIZE	TANG
PROF	1.0000	-0.4786	-0.9292	0.9729
TAX		1.0000	0.3278	-0.3564
SIZE			1.0000	-0.9746
TANG				1.0000

Table: 9

Correlation coefficients, using the observations 2010 - 2018 (RUS)

	PROF	TAX	SIZE	TANG
PROF	1.0000	-0.1399	-0.6084	0.3340
TAX		1.0000	-0.4030	-0.3059
SIZE			1.0000	-0.0643
TANG				1.0000

As can be seen from the tables above, for Uzbek companies there is a high correlation between profitability and tangibility. At first we have checked how adequate our model consisting of all four independent variables (Appendix 13). But the results were not satisfying. Thus, independent variability excluded because of its high correlation with tangibility, which provided a better result with adequate p value.

Table: 10

Uzb. Model 5: OLS, using observations 2010-2018 (T = 9)

Dependent variable: LTDRA

	Coefficient	Std. Error	t-ratio	p-value
const	-4.99692	2.08685	-2.3945	0.06204	*
Tax	8.49849	1.07391	7.9136	0.00052	***
Size	0.246587	0.116841	2.1104	0.08857	*
Tangibility	2.03778	0.673058	3.0277	0.02916	**
R squared	0.930263

*, **, ***, significant at the 10, 5, 1 percent level, respectively.

From the result above, it could be noted that one unit increase in tax could result in nearly 8.5 times increase in long-term debt. Similarly, a unit increase in tangibility also rises the long-term leverage by 2.03 times.

Table: 11

Uzb. Model 5: OLS, using observations 2010-2018 (T = 9)

Dependent variable: TDRA

	Coefficient	Std. Error	t-ratio	p-value
const	-5.41241	1.93819	-2.7925	0.03833	**
Tax	8.57086	0.997409	8.5931	0.00035	***
Size	0.26937	0.108518	2.4823	0.05569	*
Tangibility	2.31839	0.62511	3.7088	0.01387	**
R squared	0.943736

As can be seen from the table 11 and 12 by excluding profitability determinant, models for both long term and total debt are more adequate, although they show nearly the same result. Tax, Company size and Tangibility affect positively on Total debt level of Uzbek companies, increasing it by 8.57, 0.27 and 2.31 times respectively.

Table:12

Rus. OLS, using observations 2010-2018 (T = 9)

Dependent variable: STDRA

	Coefficient	Std. Error	t-ratio	p-value
const	-1.02864	0.232508	-4.4241	0.00687	***
Tax	0.281801	0.106912	2.6358	0.04621	**
Size	0.0720112	0.0102289	7.0400	0.00089	***
Tangibility	-0.243392	0.126716	-1.9208	0.11282
R squared	0.92

From the analyses of the Russian companies table 12 (Appendix5), it can be seen that tax and company size has a positive impact on companies short-term leverage. When Tax and size rise 1 unit, short term debt increases 0.28 and 0.07 times respectively. However, when tangibility increases 1 unit, it causes the short term debt to decrease by 0.24 times. Profitability excluded so as to get a more reliable result with better p value.

Table: 13

Rus. OLS, using observations 2010-2018 (T = 9)

Dependent variable: TDRA

	Coefficient	Std. Error	t-ratio	p-value
Profitability	-1.59588	0.267596	-5.9638	0.00190	***
Tax	-0.397714	0.1832	-2.1709	0.08205	*
Size	0.0268971	0.0106934	2.5153	0.05348	*
Tangibility	0.181763	0.266802	0.6813	0.52597
R square	0.93

Coming to the impact of the independent variables used in this study on the Total debt of the Russian companies, (Appendix 8), model analysis is quite adequate as p value is lower than 0.1 except for tangibility. It is clear that profitability and Tax impact negatively on Russian companies' Total debt ratio. When they increase by 1 unit, Total debt declines by 1.59 and 0.39 times respectively.

Table:14

Dependent variable - LTDRA

Country variable	Russia	Uzbekistan
Profitability	-1.16** (0.29)	2.37 (3.48)
Tax	-0.38 (0.20)	8.93*** (1.91)
Size	0.004 (0.01)	-0.04* (0.02)
Tangibility	0.51 (0.29)	-0.33 (1.17)
R2	0.99	0.93

*, **, ***, significant at the 10, 5, 1 percent level, respectively.

Comparing the influence of the profitability, Tax , Company size and tangibility on Long-term Debt of Russian and Uzbek companies, it evident that profitability and tax affects negatively on long-term debt of Russian companies (-1.16 and -0.38). Whereas, Size and tangibility have a positive effect (0.004 and 0.51).

In contrast, for Uzbek companies, completely vise-verse is true. While profitability and tax increases 1 unit, long term leverage increases by 2.37 and 8.93 times. However, size and tangibility cause to decrease by -0.04 and -0.33 times respectively.

Table:15

Dependent variable - STDRA

Country variable	Russia	Uzbekistan
Profitability	-0.14** (0.16)	-0.38 (0.50)
Tax	0.23 (0.12)	-0.05 (0.26)
Size	0.06** (0.01)	0.03 (0.02)
Tangibility	-0.21 (0.13)	0.44 (0.24)
R2	0.94	0.87

*, **, ***, significant at the 10, 5, 1 percent level, respectively.

Profitability affect negatively on short term debt of the companies in both Russia and Uzbekistan, causing 0.14 and 0.38 times decrease in short-term debt respectively. While tax increases 1 unit, short-term debt rises 0.23 times for Russian companies, whereas short-term debt level reduces by 0.05 times for Uzbek companies.

Company size has nearly the same impact for both countries, 0.06 and 0.03 respectively.

Turning to the tangibility, it has a minus effect on Russian companies. When it rises 1 unit, Short-term debt of the companies decreases by -0.21 times. However, level of short-term debt of Uzbek companies affected positively. If tabgibility rises 1 unit, the short-term debt increases by 0.44 times.

Table: 15

Dependent variable - TDRA (Total Debt)

Country variable	Russia	Uzbekistan
Profitability	-1.59*** (0.26)	-5.41** (1.93)
Tax	-0.39* (0.18)	8.57*** (0.99)
Size	0.02* (0.01)	0.26* (0.10)
Tangibility	0.18 (0.26)	2.31** (0.62)
R2	0.99	0.94

*, **, ***, significant at the 10, 5, 1 percent level, respectively.

According to the country differences indicated in table 15, profitability has a negative impact on both countries total debt level. While 1 unit increase in profitability, total debt decreases 1.59 times for Russia and 5.41 for Uzbekistan. However, tax inversely affects the countries. While tax increases by 1 unit, total debt reduces by 0.39 times for Russia and increases by 8.57 for Uzbekistan, which is a significant difference between the countries.

In contrast, both size and tangibility affect positively on total debt level of both countries. 1 unit increase in size causes to total debt to rise by 0.02 and 0.26 times in Russia and Uzbekistan respectively. Similarly, tangibility also causes to increase by 0.18 and 2.31 times respectively.

Differences can be clearly seen from the models below.

Rus	TDRA = - 1.59Profitability - 0.39Tax + 0.02Size + 0.18Tangibility + ?
Uzb	TDRA = - 5.41Profitability + 8.57Tax + 0.26Size + 2.31Tangibility + ?

CONCLUSION AND RECOMMENDATIONS

Capital structure if of the essence for every company and closely connected with the fulfillment of the obligations of stakeholders. Research into the capital structure has always in a continuous development since the first milestone by Modigliani and Miller in 1958. [70]. Since the irrelevance theory was unrealistic, in 1963 Modigliani and Miller corrected their irrelevance theory by including tax advantage of debt, which led to the new main 3 capital structure theories: the trade-off theory, agency cost theory and the pecking order theory. [71]

This study analyzed the country differences of companies' capital structure listed in Moscow stock market and Tashkent stock market during the period from 2010 to 2018. As no single research has been conducted in this field for companies in Uzbekistan, this study could serve as a foundation for the further research in this area.

This study analyzed the capital structure of biggest Russian and Uzbek companies to find out the level of shirt term, long-term and total debt, and how they are affected by the companies size, tax, tangibility and profitability.

Since profitability has negative impact on total debt of the companies in both countries, it could be concluded that the companies' financial managers tend to follow Pecking order theory by using internal finance as much as possible.

From the results, it has also been found out that company size has positive influence on leverage in both countries, conforming the point that big companies have easier access for debt borrowing.

Finally, this thesis has a number of limitations. Firstly, it is nearly impossible to collect sufficient data for Uzbek companies, which has an influential impact on the reliability of the results achieved. This can be explained by the fact that most of the companies in Uzbekistan still follow National standards of accounting which limits the comparison them with companies in other countries. Since most enterprises started to follow IFRS from 2015, it makes the data collection impossible for longer period. As a result, this study only covers the period between 2010 and 2018.

Further limitation is that non-financial companies in Listed Tashkent stock exchange are not big enough to compare with the Russian ones. In addition, some companies data are unreachable.

LIST OF ACRONYMS

Acronym	Meaning
MOEX	Moscow stock exchange
IFRS	International Financial Reporting Standards
OLS	Ordinary Least of Squares
WACC	Weighted Average Cost of capital
UZSE	Republican Stock Exchange «Toshkent»
LTDRA	Long-term Debt / Total Assets
STDRA	Short-term Debt / Total Assets
TDRA	Total Debt / Total Assets
PROF	Profitability
TAX	Tax paid / net income
SIZE	Natural logarithm of Total assets
TANG	Tangibility
CBR	Central Bank of the Russian Federation.
NDT	Non-Debt tax shield.
EBIT	Earnings Before Interest and Tax
L	Financial leverage
UAS	Uzbek Accounting Standards
NPV	Net Present Value
RUS	Russia
UZB	Uzbekistan

LIST OF REFERENCES

1. Department Of Accountancy, University Of Kelaniya// Capital Structure Theories// Accounting And Research Vol. 6(1), (2017)

2. Seadin Xhaferi, Besa Xhaferi // Alternative Theories Of Capital Structure// European Scientific JournalVol 11, No 7, 2015.

3. Ф.Т. Васильевна (2013)

4. Peter N. Brusov And Tatiana V. Filatova// The Absence Of The Optimal Capital Structure In The Trade Off Theory// Вестник Финансового Университета, (2013)

5. Hashemi Tilehnouei Mostafa* And Shivaraj Boregowda// A Brief Review Of Capital Structure Theories// Jurnal Of Recent Sciences Vol. 3(10), 113-118, October (2014)

6. Department Of Accountancy, University Of Kelaniya// Capital Structure Theories// Accounting And Research Vol. 6(1), (2017)

7. D.K.Y Abeywardhana// Capital Structure Theory: An Overview // Accounting And Research Vol. 6(1), January (2017)

8. Giorgo Canarella, Mahmoud Nourayi, Michael J. // An Alternative Test Of The Trade-Off Theory Of Capital Structure: // Accounting And Research Vol., August (2014)

9. Е. Г. Русанова, // Развитие Теории Структуры Капитала После Модильяни И Миллера: // Вопросы Экономики. August (2011)

10. Murray Z. Frank, Vidhan K. Goyal //Profits And Capital Structure// Francisco Meetings Paper// March 2008

11. Abeywardhana D. // Capital Structure Theory: An Overview // Accounting And Research Vol. 6(1), January (2017)

12. Wan Shahdila, Nor Fadilah Bahari, Shafina Fisal// A Overview Review Of Capital Structure Theories// Jurnal Of Recent Sciences November (2015))

13. Giorgo Canarella, Mahmoud Nourayi, Michael J. // An Alternative Test Of The Trade-Off Theory Of Capital Structure: // Accounting And Research Vol., August (2014)

14. Myers And Majluf// Testing Static Tradeoff Against Pecking Order Models Of Capital Structure // Journal Of Financial Economics// 1984).

15. Flannery, M. J., & Rangan, K. P. // Partial adjustment toward target capital structures // Journal of Financial Economics , 2006

16. Hashemi Tilehnouei Mostafa* And Shivaraj Boregowda// A Brief Review Of Capital Structure Theories// Jurnal Of Recent Sciences Vol. 3(10), 113-118, October (2014)

17. Marc L. Lipson And Sandra Mortal // Liquidity And Capital Structure // Journal Of Financial Markets, March 3, 2009

18. Е. Г. Русанова, // Развитие Теории Структуры Капитала После Модильяни И Миллера: // Вопросы Экономики. August (2011)

19. Myers, Stewart C. "Capital Structure Puzzle," Journal Of Finance, Vol. 39, No. 3, July 1984, Pp. 575-592.

20. Titman And Wessels//The Determinants Of Capital Structure Choice// The Journal Of Finance, March, 1988.

21. Stephen A. Ross// The Determination Of Financial Structure//The Bell Journal Of Economics Vol. 8, No. 1 (Spring, 1977), Pp. 23-40

22. Michel Poitevin, // Financial Signalling And The "Deep-Pocket" Argument//RAND Journal Of Economics, 1989, Vol. 20, Issue 1, 26-40

23. Majluf, Nicholas S. and Stewart C. Myers. "Corporate Financing And Investment Decisions When Firms Have Information That Investors Do Not Have," Journal Of Financial Economics, Vol. 13, No. 2, 1984, Pp. 187-221

24. Merton H. Miller Kevin Rock // Dividend Policy Under Asymmetric Information// Journal Of Finance Banner. Volume40, Issue4 September 1985 Pages 1031-1051

25. Kevin Rock // Why New Issues Are Underpriced// Journal Of Financial Economics// 1986.

26. Ivo Welch // The Journal Of The American Finance Association // Volume44, Issue2, June 1989

27. Irina V. Ivashkovskaya, Maria S.Solntseva // The Capital Structure Of Russian Companies: Testing Trade-Off Theory Versus Pecking Order. // Журнал “Корпоративные Финансы”, (2007)

28. Malcolm Baker , Jeffrey Wurgler // Market Timing And Capital Structure // The Journal Of Finance// 17 December 2002

29. Giorgo Canarella, Mahmoud Nourayi, Michael J. // An Alternative Test Of The Trade-Off Theory Of Capital Structure: // Accounting And Research Vol., August (2014)

30. Baker M And Wurgler J// Market Timing And Capital Structure // Jurnal Of Finance, October (2002)

31. Dirk Jenter // Market Timing And Managerial Portfolio Decisions// The Journal Of Finance// 12 August 2005

32. Alexander Butler, Gustavo Grullon And James P. Weston// Stock Market Liquidity And The Cost Of Issuing Equity//Journal Of Financial And Quantitative Analysis, 2005, Vol. 40, Issue 02, 331-348

33. Amy Dittmar, Anjan Thakor, Why Do Firms Issue Equity? // The Journal Of Finance// January 2007

34. Pantya Yu.M. The History Of The Development Of The Principal-Agent Problem // Journal Of Economic Theory. - 2011. - №4. - P. 212-215

35. Kharchilava H.P. Corporate Governance In The Context Of The Relationship Between The Principal And The Agent // Bulletin Of The Samara State University Of Economics. - 2015. - №2 (124). - P. 66-72.

36. Jensen M., Meckling W. Theory Of The Firm: Managerial Behavior, Agency Costs And Ownership Structure. Journal Of Financial Economics, October, 1976, V. 3, No. 4, Pp. 305-360.

37. Лисицкая Т.С И Тарасенко А. Ю. // Роль Агентских Отношений В Формировании Структуры Капитала Хозяйствующих Субъектов // Интернет-Журнал «Науковедение», 2017

38. Мануйленко В.В., Кабардокова Л.А. Формирование Инструментария Оценки Проблем В Управлении Финансовыми Ресурсами Обществ С Ограниченной Ответственностью // Финансовая Аналитика: Проблемы И Решения. - 2016.

39. Максимова С.М. Информационная Прозрачность Как Характеристика Качества Организационной Культуры Компании // МИР (Модернизация.Инновации.Развитие). - 2015

40. Ольшанский А.С. Теория Интересов, Принципал-Агентская Теория И Асимметрия Информации // Вестник Калининградского Филиала Санкт-Петербургского Университета МВД России. - 2011.

41. Douglas O. Cook And Tian Tang// Macroeconomic Conditions And Capital Structure Adjustment Speed // Journal Of Corporate Finance, October (2008)

42. Paul Schultz // Pseudo Market Timing and the Long?Run Underperformance of IPOs // the Journal Of Finance, March 2003

43. Gerasimova S.M.// Эмпирические исследования структуры капитала компаний на развивающихся рынках: // Journal of “Корпоративные Финансы", (2012)

44. Rajan and Zingales //What Do we Know about Capital Structure? Some evidence from International Data// The Journal of Finance, 1995

45. Roberta Dessi and Donald Robertson // Debt, Incentives and Performance: Evidence from UK Panel Data// The Economic Journal, 2003

46. Frank and Goyal // Capital Structure Decisions: Which Factors are Reliably Important?// 2007

47. Wolfgang Drobetz and Roger Fix // What are the Determinants of the Capital Structure? Some Evidence for Switzerland // April, 2003

48. Graham and Harvey // The theory and practice of corporate "nance: evidence from the "eld// Journal of Financial Economics 60 (2001) 187}243

49. Bancel, F., Mitoo, U.R. Cross-Country Determinants of Capital Structure Choice: a Survey of European Firms, Financial Management, 2004. - pp. 103-132

50. Beattie V., Goodacre A., Thomson S. Corporate Financing Decisions: UK Survey Evidence. Journal of Business Finance & Accounting, № 33, 2006. - pp. 9-10.

51. Brounen, D., Jong, A. and Koedijk, K. Capital Structure Policies in Europe: Survey Evidence., Journal of Banking and Finance, Vol. 30, No. 5, 2009. -pp. 409-1442.

52. Antonios Antoniou, Yilmaz Guney, Krishna Paudyal Determinants of Corporate Capital Structure: Evidence from European Countries, 2002.

53. Frank, M., Goyal, V. Capital structure decisions. Working Paper, 2003

54. Fama E., French K. Financing decisions: Who Issues Stock? Working Paper, 2004.

55. Chen, Y., Hammes, K. Capital Structure. Theories and Empirical results - a Panel Data Analysis., Journal of Finance 43, 2010.

56. Kayhan A., Titman S. Firms' Histories and Their Capital Structures. Journal of Financial Economics 83 (1), 2007

57. Titman and Roberto// Determinants of capital Structure Determinants // Journal of Finance, March (1988)

58. Abimbola Adedeji // A Cross-sectional Test of Pecking Order Hypothesis Against Static Trade-off Theory on UK data // University of Birmingham - Birmingham Business School 2002

59. I. M. Pandey // Corporate Dividend Policy and Behavior: The Malaysian Experience // IIMA Working Paper No. 2001-11-01// 2002

60. Samuel Gui Hai Huang and Frank M. Song // The Determinants of Capital Structure: Evidence from China //HIEBS 2002

61. Milton Harris; Artur Raviv // The Theory of Capital Structure // The Journal of Finance, Vol. 46, No. 1. (Mar., 1991), pp. 297-355.

62. Dharmendra Singh // A Panel Data Analysis of Capital Structure Determinants: An Empirical Study of Non-Financial Firms in Oman // International Journal of Economics and Financial Issues, 2016, 6(4), 1650-1656

63. Ivanov, I. Детерминанты структуры капитала публичных российских компаний, Journal of Corporate Finance Research / Корпоративные Финансы, 2010

64. Salla Pцyry and Benjamin Maury // Influential ownership and capital structure // Volume 31, Pages 311-324, 2010.

65. Mara Faccio // Politically Connected Firms// American Economic Review// July 12, 2004

66. Evgeny V. Ilyukhin // The determinants of Capital Structure: Evidence from Russia // Journal of Corporate Finance Research // 2017 vol.14

67. Jeffrey K. MacKie-Mason // Do Taxes Affect Corporate Financing Decisions? // The Journal of Finance, Vol. 45, 1990, pp. 1471-1493

68. Ishola Akintoye // “Sensitivity of Performance to Capital Structure: A Consideration for Selected Food and Beverages Companies in Nigeria”. Journal of Social Sciences, Hellenic Open University, Vol. 7 Pp. 29-35. 2008.

69. Franco Modigliani and Merton H. Miller // The Cost of Capital, Corporation Finance and the Theory of Investment // The American Economic Review, Vol. 48, No. 3 (Jun., 1958), pp. 261-297

70. Franco Modigliani and Merton H. Miller // Corporate Income Taxes and the Cost of Capital: A Correction // The American Economic Review, Vol. 53, No. 3 (Jun., 1963), pp. 433-443

Размещено на Allbest.ru