Report on Life Insurance Company

Acknowledgement

In any comprehensive work like this, credit must go to the multitude of people. Certainly we should acknowledge the contribution of the pioneers in the field. Especially whose teachings have become a part of our thinking.

At first we are grateful to Almighty Allah. Then we express our sincere gratitude to our honorable course teachers, Md. Hasan Uddin Lecturer of Finance and Banking department. Business Administration and management, Patuakhali Science and Technology University, for His guidance and valuable remark about the convention of the report.

Executive summary:

This paper provides further evidence of the capital structure theories pertaining to life insurance companies in Bangladesh and analyzing a capital structure of life insurance companies to the Bangladesh business environment. For this purpose, leverage is taken as dependent variable while profitability, size, growth, tangibility of assets and are selected as independent variables. The result of OLS(ordinary least square) regression model indicates that size, profitability, growth, tangibility are important determinants of capital structure of life insurance companies. The results of cross-sectional OLS regression show that the information asymmetry theory is more pertinent theories whereas there is little evidence to support the static trade-off theory and there is very little evidence to support the agency cost theory of capital structure theories of life insurance companies.

1. Introduction:

Capital structure refers to relationship between long term, short term forms of financing such as debentures, bonds, bank and trade credits, commercial papers, preference share capital and equity capital. In another words, it refers to relationship between equity capital and debt capital that are combined in target proportion to attain the goals of the firm. Insurance companies are especially interested...