The impact of operating leverage on the capital structure of Johannesburg Stock Exchange-listed firms before and after the 2008 global financial crisis

dc.contributor.authorMohohlo, Matabane T.
dc.contributor.authorHall, J.H. (John Henry)
dc.date.accessioned2019-06-12T11:10:44Z
dc.date.available2019-06-12T11:10:44Z
dc.date.issued2018-04-05
dc.description.abstractThe financial leverage-operating leverage trade-off hypothesis states that as financial leverage increases, management of firms will seek to reduce the exposure to operating leverage in an attempt to balance the overall risk profile of a firm. It is the objective of this study to test this hypothesis and ascertain whether operating leverage can indeed be added to the list of factors that determine the capital structure of South African firms. Forty-six firms listed on the Johannesburg Stock Exchange between 1994 and 2015 are analysed and the impact of operating leverage is determined. The results are split into two periods, that is, the period before the global financial crisis (1994–2007) and after the global financial crisis (2008–2015). The impact of operating leverage during these two periods is then compared to determine whether a change in the impact of operating leverage on the capital structure can be observed especially following the crisis. The results show that the conservative nature of South African firms leading up to 2008 persisted even after the global financial crisis. At an industry level, the results reveal that operating leverage does not have a noticeable impact on capital structure with the exception of firms in the industrials sector of the South African economy.en_ZA
dc.description.departmentFinancial Managementen_ZA
dc.description.librarianam2019en_ZA
dc.description.urihttps://www.jefjournal.org.zaen_ZA
dc.identifier.citationMohohlo, M.T. & Hall, J.H., 2018, ‘The impact of operating leverage on the capital structure of Johannesburg Stock Exchange-listed firms before and after the 2008 global financial crisis’, Journal of Economic and Financial Sciences 11(1), a164. https://DOI.org/10.4102/jef.v11i1.164.en_ZA
dc.identifier.issn1995-7076 (print)
dc.identifier.issn2312-2803 (online)
dc.identifier.other10.4102/jef.v11i1.164
dc.identifier.urihttp://hdl.handle.net/2263/70166
dc.language.isoenen_ZA
dc.publisherAOSISen_ZA
dc.rights© 2018. The Authors. Licensee: AOSIS. This work is licensed under the Creative Commons Attribution License.en_ZA
dc.subjectFinancial crisisen_ZA
dc.subjectSouth African firmsen_ZA
dc.subjectSouth African economyen_ZA
dc.subjectJohannesburg Stock Exchange (JSE)en_ZA
dc.titleThe impact of operating leverage on the capital structure of Johannesburg Stock Exchange-listed firms before and after the 2008 global financial crisisen_ZA
dc.typeArticleen_ZA

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