Global Financial Crisis and Determinants of Capital Structure: Evidence from Ghanaian Non-Financial Listed Firms

The International Journal of Business and Finance Research, v. 14(1), p. 35-56, 2020

22 Pages Posted: 14 Feb 2020

See all articles by Billy Kobina Enos

Billy Kobina Enos

Accra Institute of Technology

Joseph Yensu

Kumasi Technical University - TUK

Harrison Obeng

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

Date Written: 2020

Abstract

This study uses Generalized Method of Moments (GMM) to analyze the effects of macroeconomic and firm-specific factors on the capital structure of non-financial listed firms in Ghana, for both the normal period (2006-2016) and the global financial crisis period (2008-2009). Real GDP growth, firm size, profitability, tangibility, and growth opportunities have a significant effect on varying leverage ratios of sample firms in the normal period. Inflation and real GDP growth do not significantly influence the financing choice of sample firms during the global financial crisis period. However, profitability, firm size, tangibility, liquidity, and growth opportunities have significant effects on capital structure decisions of sample firms, which could differ in periods of the global financial crisis. Our findings illuminate the possible role of the trade-off, pecking order and agency cost theories in the capital structure of sample firms despite the crisis period. The study also offers policy implications on the need for the development of capital markets as well as the ability of managers to influence corporate capital structure to remain competitive regardless of a global financial crisis event.

Keywords: Global Financial Crisis, Capital Structure, Macroeconomic Factors, Firm-Specific Factors, Ghana

JEL Classification: G01, G32

Suggested Citation

Kobina Enos, Billy and Yensu, Joseph and Obeng, Harrison, Global Financial Crisis and Determinants of Capital Structure: Evidence from Ghanaian Non-Financial Listed Firms (2020). The International Journal of Business and Finance Research, v. 14(1), p. 35-56, 2020. Available at SSRN: https://ssrn.com/abstract=3522534

Billy Kobina Enos (Contact Author)

Accra Institute of Technology ( email )

Joseph Yensu

Kumasi Technical University - TUK ( email )

Kumasi - Ghana
West Africa
Kumasi, Ashanti +233
Ghana

Harrison Obeng

KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY ( email )

Ghana

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