Dynamic capital structure determinants : some evidence from South African firms

dc.contributor.authorMoyo, Vusani
dc.contributor.authorWolmarans, Hendrik Petrus
dc.contributor.authorBrummer, Leon Marx
dc.contributor.emailhendrik.wolmarans@up.ac.zaen_US
dc.date.accessioned2014-03-31T07:28:37Z
dc.date.available2014-03-31T07:28:37Z
dc.date.issued2013-10
dc.description.abstractThis study uses a sample of 49 manufacturing, 24 mining and 23 retail firms listed on the Johannesburg Stock Exchange during the period 2005-2010 to investigate the relationship between leverage and the firm’s key financial performance variables. Leverage is directly proportional to cash flow. This is consistent with the trade-off (TO) and agency theories. Capital expenditure is positively correlated to leverage, while asset tangibility and retention rate are negatively correlated to leverage. These findings confirm the validity of the pecking order theory. Liquidity and financial distress are negatively correlated to leverage. Consistently with the TO theory, leverage increases with profitability. Share price is positively correlated to leverage and this finding validates the market timing theory. The economic value added (EVA) is positively correlated to leverage and this finding rejects the TO theory. The true speed of adjustment for the sample is 64.20% for book-to-debt ratio and 28.11% for market-to-debt ratio.en_US
dc.description.librarianam2014en_US
dc.description.urihttp://www.uj.ac.za/EN/Faculties/ecofin/fininvestman/jef/Pages/home.aspxen_US
dc.identifier.citationMoyo, V, Wolmarans, HP & Brummer, L 2013, 'Dynamic capital structure determinants : some evidence from South African firms', Journal of Economic and Financial Sciences, vol. 6, no. 3, pp. 661-682.en_US
dc.identifier.issn1995-7076
dc.identifier.urihttp://hdl.handle.net/2263/37220
dc.language.isoen_USen_US
dc.publisherFaculty of Economic and Financial Sciences, University of Johannesburgen_US
dc.rightsFaculty of Economic and Financial Sciences, University of Johannesburgen_US
dc.subjectTrade-off (TO)en_US
dc.subjectLeverageen_US
dc.subjectFinancial performance variablesen_US
dc.subjectAgency theoriesen_US
dc.titleDynamic capital structure determinants : some evidence from South African firmsen_US
dc.typeArticleen_US

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