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Institutions and corporate capital structure in the MENA region

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  • Belkhir, Mohamed
  • Maghyereh, Aktham
  • Awartani, Basel

Abstract

This paper provides novel evidence on firm- and country-level determinants of firm capital structure decisions in the MENA region. Using a sample of 444 listed firms from ten countries, over the 2003–2011 period, we find that MENA firms have target leverage ratios towards which they adjust over time. Yet, the speed of adjustment varies from one country to another. Our findings also suggest that some firm-level factors are associated with leverage consistent with the trade-off and pecking order theories of capital structure. We further find robust evidence that better institutional quality leads firms to use more debt.

Suggested Citation

  • Belkhir, Mohamed & Maghyereh, Aktham & Awartani, Basel, 2016. "Institutions and corporate capital structure in the MENA region," Emerging Markets Review, Elsevier, vol. 26(C), pages 99-129.
  • Handle: RePEc:eee:ememar:v:26:y:2016:i:c:p:99-129
    DOI: 10.1016/j.ememar.2016.01.001
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    More about this item

    Keywords

    Capital structure; Leverage; MENA; Institutions; Financial development;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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