Capital structure of Finnish firms – Estimating the effects of firm characteristics on capital structure

One of the most disputable matters in the theory of finance has been the theory of capital structure. The seminal contributions of Modigliani and Miller (1958, 1963) gave rise to a multitude of studies and debates. Since the initial spark, the financial literature has offered two competing theories of financing decision: the trade-off theory and the pecking order theory. The trade-off theory suggests that firms have an optimal capital structure balancing the benefits and costs of debt. The pecking order theory approaches the firm capital structure from information asymmetry perspective and assumes a hierarchy of financing, with firms using first internal funds, followed by debt and as a last resort equity. This thesis analyses the trade-off and pecking order theories and their predictions on a panel data consisting 78 Finnish firms listed on the OMX Helsinki stock exchange. Estimations are performed for the period 2003–2012. The data is collected from Datastream system and consists of financial statement data. A number of capital structure characteristics are identified: firm size, profitability, firm growth opportunities, risk, asset tangibility and taxes, speed of adjustment and financial deficit. A regression analysis is used to examine the effects of the firm characteristics on capitals structure. The regression models were formed based on the relevant theories. The general capital structure model is estimated with fixed effects estimator. Additionally, dynamic models play an important role in several areas of corporate finance, but with the combination of fixed effects and lagged dependent variables the model estimation is more complicated. A dynamic partial adjustment model is estimated using Arellano and Bond (1991) first-differencing generalized method of moments, the ordinary least squares and fixed effects estimators. The results for Finnish listed firms show support for the predictions of profitability, firm size and non-debt tax shields. However, no conclusive support for the pecking-order theory is found. However, the effect of pecking order cannot be fully ignored and it is concluded that instead of being substitutes the trade-off and pecking order theory appear to complement each other. For the partial adjustment model the results show that Finnish listed firms adjust towards their target capital structure with a speed of 29% a year using book debt ratio.

National Myths and Heroes: a Case of Vytautas the Great in Lithuania

The main focus of the thesis concentrates on nationalism and how it is expressed through national myth and a hero. As a case study for Lithuania the cult of Vytautas the Great is used. Theses present how the myth of Vytautas the Great was created and why particularly the Grand duke became a national symbol. It also examines how main nationalism theories are reflected in this case. The main purpose of the thesis is to find out how this myth matches the needs of the current Lithuanian society – the last year schoolchildren (eighteen – nineteen years old) in particular. The main method used in the empirical part of the thesis is qualitative analysis: primary source material was gathered by using semi – structured interviews and the results were analyzed by employing thematic analysis. The theoretical part of the study presents the core nationalism and ethnic identity theories and describes the concepts of national myth and hero as well as their connection and influence for the society and Lithuanians precisely. In this study nationalism is understood as a phenomenon that holds a nation together and is reflected via certain national symbols such as national myths and heroes by forming a national identity the meaning of which is different for each generation. The analysis of the results in this study has showed that the idea of Vytautas the Great as a national hero – symbol, created in the interwar Lithuanian society has lost its significance for the current schoolchildren and has been replaced by other images. However, at the same time the Grand duke is still perceived as an embodiment of the main national Lithuanian virtues.