Title: An Assessment of the Static Trade-off Theory of Capital Structure UsingGhana Stock Market Data
Abstract: The study, employing a multiple regression method, sought to examine whether the Static Trade theory had any impact on Ghanaian companies in their decisions about capital structure during the period 2001-07. Among the study findings were, that there was negative relationship between leverage and size, and between leverage and profitability, contrary to theoretical prediction; that the firms with tangible fixed assets would employ high levels of leverage since tangible fixed assets have a high collateral value, and firms with growth opportunities would take on debt to finance growth, but large and profitable firms would use less debt or no debt at all in their capital structure, which is inconsistent with theory; and that, most of the companies did not employ long-term debt. These have important implications for policymakers in their quest to develop the debt market for access to long-term finance by Ghanaian companies.
Publication Year: 2011
Publication Date: 2011-11-01
Language: en
Type: article
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Cited By Count: 5
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