Title: Determinants of capital structure: evidence from Sub-Saharan Africa

Authors: Gibson Hosea Munisi

Addresses: Department of Business Studies, School of Earth Sciences, Real Estate, Business Studies and Informatics, Ardhi University, P.O. Box 35176, Dar es Salaam, Tanzania

Abstract: This study utilised the comprehensive database of non-financial firms listed on the stock exchanges of 12 Sub-Saharan Africa countries in the period 2005-2009 to examine the determinants of capital structure of these firms. The findings indicate that capital structure is negatively associated with profitability and tangible assets, which is supported by the pecking-order theory and the trade-off theory, respectively. Furthermore, the findings show that capital structure is positively associated with free cash and firms' growth, which is consistent with the agency theory and the pecking-order theory, respectively. The results have implications for practitioners, such as business managers, bankers and lenders as well as for capital structure research. Furthermore, the study confirms that association between capital structure and some specific characteristics of firms is inconclusive as some results differ from the results of previous studies. This indicates that there is a need for scholars to conduct more studies to unravel the capital structure puzzle.

Keywords: capital structure; determinants; leverage; Sub-Saharan Africa.

DOI: 10.1504/IJMFA.2017.084780

International Journal of Managerial and Financial Accounting, 2017 Vol.9 No.2, pp.182 - 199

Received: 20 Aug 2016
Accepted: 07 Apr 2017
Published online: 26 Jun 2017 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article