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Determinants of capital structure: evidence from Sub-Saharan Africa

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  • Gibson Hosea Munisi

Abstract

This study utilised the comprehensive database of non-financial firms listed on the stock exchanges of 12 Sub-Saharan Africa countries in the period 2005-2009 to examine the determinants of capital structure of these firms. The findings indicate that capital structure is negatively associated with profitability and tangible assets, which is supported by the pecking-order theory and the trade-off theory, respectively. Furthermore, the findings show that capital structure is positively associated with free cash and firms' growth, which is consistent with the agency theory and the pecking-order theory, respectively. The results have implications for practitioners, such as business managers, bankers and lenders as well as for capital structure research. Furthermore, the study confirms that association between capital structure and some specific characteristics of firms is inconclusive as some results differ from the results of previous studies. This indicates that there is a need for scholars to conduct more studies to unravel the capital structure puzzle.

Suggested Citation

  • Gibson Hosea Munisi, 2017. "Determinants of capital structure: evidence from Sub-Saharan Africa," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 9(2), pages 182-199.
    • Handle: RePEc:ids:injmfa:v:9:y:2017:i:2:p:182-199
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    Cited by:

    1. Ayhan Orhan & Dervis Kirikkaleli & Fatih Ayhan, 2019. "Analysis of Wavelet Coherence: Service Sector Index and Economic Growth in an Emerging Market," Sustainability, MDPI, vol. 11(23), pages 1-12, November.

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