Determinants of Capital Structure Among Non-Quoted Mauritian Firms Under Specificity of Leverage: Looking for a Modified Pecking Order Theory
University of Mauritius
International Research Journal of Finance and Economics, No. 31, 2009
This study explores on the capital structure for non-listed non-financial firms in Mauritius. Recourse is made towards various forms of measurement for leverage variable, ranging from liabilities to leases, loans and debt. Above all, each of these elements is considered with their short-term and long-term components to gain deeper insight of their capital structure. Results show that liquidity and size entail a negative impact on leverage. While tangibility of assets triggers a positive effect on leverage, profitability, non-debt tax shield and growth are found to be impotent. Interestingly, investment is found to be positively related to the use of leases but negatively related to loans, symptomatic to crowding out of loans by leases. Age of the company is also found to affect some of the various components of leverage. Results advocate a Modified Pecking Order Theory whereby short-term leverage precedes long-term leverage.
Number of Pages in PDF File: 10
Keywords: Capital Structure, Modified Pecking Order Theory, Non-Listed Nonfinancials
JEL Classification: G30, G32, C33Accepted Paper Series
Date posted: March 19, 2010 ; Last revised: April 26, 2010
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