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Capital Structure Management in Nepalese Enterprises

Dinesh Prasad Gajurel

Trent University School of Business; University of Tasmania, Tasmanian School of Business and Economics; Financial Research Network (FIRN)


Corporate Finance Journals, Forthcoming

This study attempts to explain the capital structure pattern and its determinants for a penal set of 20 non-financial firms listed in NEPSE for 1992-2004. By using decompositional analysis, properties of portfolio analysis, econometric analysis and opinion survey of managers, it is found that Nepalese firms are highly levered, however the long-term debt ratio is significantly low. Assets structure and size are observed positively related to leverage where as liquidity, risk, growth, non-debt tax shield are negatively related to leverage. The signs of estimates suggest that both pecking order and tradeoff theories are at work in explaining capital structure of Nepalese companies. Also, the macroeconomic factors GDP, inflation and capital market influence in firm's capital structure decisions. Opinion survey analysis shows that Nepalese managers prefer internal financing first followed bank loan financing.

Number of Pages in PDF File: 109

Keywords: capital structure, tradeoff theory, pecking order theory

JEL Classification: G32

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Date posted: August 16, 2005 ; Last revised: February 22, 2013

Suggested Citation

Gajurel, Dinesh Prasad, Capital Structure Management in Nepalese Enterprises (2005). Corporate Finance Journals, Forthcoming. Available at SSRN: https://ssrn.com/abstract=778106 or http://dx.doi.org/10.2139/ssrn.778106

Contact Information

Dinesh Prasad Gajurel (Contact Author)
Trent University School of Business ( email )
1600 West Bank Drive
Peterborough, Ontario K9J 0G2
University of Tasmania, Tasmanian School of Business and Economics ( email )
Private Bag 85
French Street, Sandy Bay
Hobart, Tasmania 7001
HOME PAGE: http://www.utas.edu.au/economics-finance/
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
HOME PAGE: http://www.firn.org.au

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