Determinants of the Capital Structure of Ghanaian Firms
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Date
2008-03-01
Authors
Joshua Abor
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
This study compares the capital structures of publicly quoted firms, large unquoted
firms, and small and medium enterprises (SMEs) in Ghana. Using a panel regression
model, the paper also examines the determinants of capital structure decisions among
the three sample groups. The results show that quoted and large unquoted firms exhibit
significantly higher debt ratios than do SMEs. The results did not show significant
difference between the capital structures of publicly quoted firms and large unquoted
firms. The results reveal that short-term debt constitutes a relatively high proportion of
total debt of all the sample groups. The regression results indicate that age of the firm,
size of the firm, asset structure, profitability, risk and managerial ownership are important
in influencing the capital structure decisions of Ghanaian firms. For the SME sample, it
was found that factors such as the gender of the entrepreneur, export status, industry,
location of the firm and form of business are also important in explaining the capital
structure choice. The study provides useful recommendations for policy direction and
management of these firms
Description
HC 800 . A1 . A342
Keywords
Business Enterprises- Ghana , Capital - Ghana , Small Businesses Ghana