Trend in Capital Structure; A Comparative Study of Companies in Ghana and India
International Research Journal of Business Sciences, ISSN 2321-3191 Volume 2, Issue 1 (2014), pp. 205-212
9 Pages Posted: 22 Sep 2014
Date Written: July 11, 2014
The crucial financial decision of business is balancing the risk and return on the choice of financing pattern. Since there is no specific optimal debt-equity mix, companies keep changing the pattern to meet its objective and conditions. An attempt has been made to analyse the emerging trends in capital structure patterns of companies in Ghana and India, the existence of inter-country differences and identify the possible sources of such variations in capital structure. To achieve this objective, 20 listed companies were selected from Ghana and India and 5years debt-percentage to total capital structure trend analysis was used. It was found out that companies in Ghana is less debt financing in its capital structure pattern as compared to companies in India. Indian companies are decreasing the debt finance over the period while Ghanaian companies are increasing at (1%) a marginal rate. The less debt financing in Ghana is due to the fact that there is high interest rate. The high performance and efficient capital market in India has boosted shareholders confidence thereby reducing company borrowings.
Keywords: Capital Structure, Emerging trends, debt financing.
JEL Classification: G32
Suggested Citation: Suggested Citation