An investigation of the determinants of firm's capital structure : the case of industrial firms listed on the JSE securities exchange

• Main Author: Ghirmatsion, Biniam Mebrahtu
• Other Authors: Uliana, Enrico
• Format: Dissertation
• Language: English
• Published: University of Cape Town 2014
• Subjects: Financial Management
• Online Access: http://hdl.handle.net/11427/10575

Includes bibliographical references. === Most of the evidence on the determinants of capital structure is derived from the developed countries with advanced securities markets. Very little has been written about capital structure in developing countries. Thus, as noted by Drobetz and Fix (2003), the academic literature has not been very helpful in providing clear guidance on practical issues of capital structure. This paper investigates the determinants of capital structure in South Africa, a developing country with a well-developed capital market institution, the JSE. The sample constitutes 119 industrial firms each year from 1997-2002. Using a multiple regression model, size a trangibility have a postive effect on financial leverage, with the exception of the negative impact of tangibility when financial leverage is measured grossly with all liabilities. With this exception, the results on size and tangibility support the trade-off theory of capital structure.