Title: Capital structure and shareholders' value

Authors: Regina Asantewaa Aboagye; Kingsley Opoku Appiah

Addresses: Kwame Nkrumah University of Science and Technology, PMB KNUST, Kumasi, Ghana ' TF05 Ayim Complex, Kwame Nkrumah University of Science and Technology, PMB KNUST, Kumasi, Ghana

Abstract: This paper empirically examines the relationship between capital structure and shareholders' value of non-financial firms listed on the Ghana Stock Exchange from 2005 to 2014. Panel regression model, specifically the estimated generalised least square (E-GLS) was used to analyse data from 11 non-financial listed firms. We find that non-financial listed firms on the Ghana Stock Exchange used more debt than equity. Debt exhibits a significant negative relationship with shareholders' value, proxy by earnings per share. Equity, however, display a significant positive relationship with shareholders' value. The study contributes to capital structure literature from the perspective of Ghana, a country characterised by high cost of borrowing and underdeveloped debt market.

Keywords: underdeveloped debt markets; non-financial firms; debt financing; trade off theory; Ghana; shareholders' value; capital structure; earnings per share; GLS; developing countries; generalised least square.

DOI: 10.1504/EMJM.2019.099957

EuroMed Journal of Management, 2019 Vol.3 No.1, pp.50 - 60

Received: 24 Dec 2018
Accepted: 10 Jan 2019
Published online: 29 May 2019 *

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