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Financial liberalisation and the dynamics of firm leverage in a transitional economy: evidence from South Africa

Year: 2012

Type: article

Abstract: This paper examines the dynamics of corporate capital structures for listed non-financial firms in South Africa. The dynamic models of capital structure have been utilised to document several findings of empirical significance. First, transaction costs reduce dramatically in the post liberalisation regime, and the associated speed of adjustment is more pronounced, and statistically significant for the post liberalisation epoch. Second, financial liberalisation has a significant impact on the capital structure speed of adjustment. Third, the results confirm most of the theoretical predictions of capital structure theories; however, the relationship is more significant in the post liberalised regime. Finally, new evidence has been revealed on what determines the debt maturity structure of firms in a transitional economy.

Source: South African Journal of Economic and Management Sciences

DOI: 10.4102/sajems.v15i2.152

Authors: Chimwemwe Chipeta, Hendrik Wolmarans, Frans Vermaak

Institutions: University of the Witwatersrand, University of Pretoria

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: gold

Estimated APC paid: $793