Determinants of the capital structure of municipal water utility systems: an empirical study of Texas public water systems
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Jn-Marie, Monique.
Determinants of the capital structure of municipal water utility systems: an empirical study of Texas public water systems. Retrieved from
https://doi.org/doi:10.7282/t3-3zwb-rd49
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TitleDeterminants of the capital structure of municipal water utility systems: an empirical study of Texas public water systems
Date Created2019
Other Date2019-10 (degree)
Extent1 online resource (x, 110 pages) : illustrations
DescriptionDuring the past several decades, increasing awareness of public infrastructure deterioration has elevated the importance of ensuring quality water systems. Though regulated by the Environmental Protection Agency (EPA), ensuring long-term sustainability of the nation’s fragmented water infrastructure and funding-related costs are largely the responsibility of municipal governments. In 2013, the EPA reported that aging drinking water pipes may cost $384 billion to repair or replace and sustain through 2030. Various factors are considered before accessing capital, each with its own motivations and consequences to the system’s risk profile. The purpose of this study was to understand the key financial and contextual determinants of municipal water systems’ capital structure, expressed as leverage. Through the lens of capital structure theories, the quantitative study involved ordinary least squares regression to examine the extent of, and directional relationship between, leverage and seven firm-level determinants: profitability, growth, liquidity, size, risk, tangibility, and age. An ANOVA allowed for examination of differences in the context of the service area population size, and ancillary analysis measured differences in leverage before, during, and after the Great Recession of 2008–2009. The most significant relationships with leverage were between liquidity and age, which supports pecking order theory assertions that the use of retained earnings is preferable to debt. Qualitative assessment of management discussions and capital improvement plans identified key elements of funding decisions that affect leverage. Additionally, although leverage of the systems serving the largest populations surpasses that of mid-range systems, those serving the smallest populations are far more leveraged than their counterparts. Qualitative findings indicated that operating margins, financial flexibility, socioeconomic considerations, contingency reserves, and debt carry the most weight in influencing funding decisions because of their collective influence on their credit risk profile. The effects of climate-related events on infrastructure and water resources factor into policy implications. A need exists for scalable and replicable subnational and municipal efforts for modernization of the water sector, data availability for better capital budgeting, and expansion of pooled financial resources, particularly for systems that lack ready access to the debt market.
NotePh.D.
NoteIncludes bibliographical references
Genretheses, ETD doctoral
LanguageEnglish
CollectionGraduate School - Newark Electronic Theses and Dissertations
Organization NameRutgers, The State University of New Jersey
RightsThe author owns the copyright to this work.