Capital Structure Management in Nepalese Enterprises

Corporate Finance Journals, Forthcoming

109 Pages Posted: 16 Aug 2005 Last revised: 22 Feb 2013

Dinesh Gajurel

University of New Brunswick - Fredericton; University of Tasmania, Tasmanian School of Business and Economics; Financial Research Network (FIRN)

Date Written: 2005

Abstract

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.

Keywords: capital structure, tradeoff theory, pecking order theory

JEL Classification: G32

Suggested Citation

Gajurel, Dinesh, 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

Dinesh Gajurel (Contact Author)

University of New Brunswick - Fredericton ( email )

Bailey Drive
P.O. Box 4400
Fredericton, New Brunswick
Canada

HOME PAGE: http://unb.ca/fredericton/business

University of Tasmania, Tasmanian School of Business and Economics ( email )

Private Bag 85
French Street, Sandy Bay
Hobart, Tasmania 7001
Australia

HOME PAGE: http://www.utas.edu.au/economics-finance/

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Register to save articles to
your library

Register

Paper statistics

Downloads
1,731
rank
8,369
Abstract Views
11,285
PlumX