This paper examines the dynamics of corporate capital structures for listed non-financial firms in South
Africa. The dynamic models of capital structure have been utilised to document several findings of empirical
significance. First, transaction costs reduce dramatically in the post liberalisation regime, and the associated
speed of adjustment is more pronounced, and statistically significant for the post liberalisation epoch.
Second, financial liberalisation has a significant impact on the capital structure speed of adjustment. Third,
the results confirm most of the theoretical predictions of capital structure theories; however, the relationship
is more significant in the post liberalised regime. Finally, new evidence has been revealed on what
determines the debt maturity structure of firms in a transitional economy.