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Global Financial Crisis And Determinants Of Capital Structure: Evidence From Ghanaian Non-Financial Listed Firms

Author

Listed:
  • Billy Kobina Enos
  • Joseph Yensu
  • Harrison Obeng

Abstract

This study uses Generalized Method of Moments (GMM) to analyze the effects of macroeconomic and firmspecific factors on the capital structure of non-financial listed firms in Ghana, for both the normal period (2006-2016) and the global financial crisis period (2008-2009). Real GDP growth, firm size, profitability, tangibility, and growth opportunities have a significant effect on varying leverage ratios of sample firms in the normal period. Inflation and real GDP growth do not significantly influence the financing choice of sample firms during the global financial crisis period. However, profitability, firm size, tangibility, liquidity, and growth opportunities have significant effects on capital structure decisions of sample firms, which could differ in periods of the global financial crisis. Our findings illuminate the possible role of the trade-off, pecking order and agency cost theories in the capital structure of sample firms despite the crisis period. The study also offers policy implications on the need for the development of capital markets as well as the ability of managers to influence corporate capital structure to remain competitive regardless of a global financial crisis event

Suggested Citation

  • Billy Kobina Enos & Joseph Yensu & Harrison Obeng, 2020. "Global Financial Crisis And Determinants Of Capital Structure: Evidence From Ghanaian Non-Financial Listed Firms," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 14(1), pages 35-56.
    • Handle: RePEc:ibf:ijbfre:v:14:y:2020:i:1:p:35-56
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    Citations

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    Cited by:

    1. Narayan, Seema & Bui, Minh Ngoc Thi & Ren, Yishuai & Ma, Chaoqun, 2021. "Macroeconomic determinants of US corporate leverage," Economic Modelling, Elsevier, vol. 104(C).

    More about this item

    Keywords

    Global Financial Crisis; Capital Structure; Macroeconomic Factors; Firm-Specific Factors; Ghana;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • 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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