Online from: 2000
Subject Area: Accounting and Finance
Options: To add Favourites and Table of Contents Alerts please take a Emerald profile
|Title:||Structural breaks in the parameter estimates of the determinants of capital structure: Some evidence from the JSE|
|Author(s):||Chimwemwe Chipeta, (Department of Economic and Business Sciences, University of the Witwatersrand, Johannesburg, South Africa), Hendrik P. Wolmarans, (Department of Financial Management, University of Pretoria, Pretoria, South Africa), Frans N.S. Vermaak, (Department of Financial Management, University of Pretoria, Pretoria, South Africa), Stacey Proudfoot, (Department of Financial Management, University of the Witwatersrand, Johannesburg, South Africa)|
|Citation:||Chimwemwe Chipeta, Hendrik P. Wolmarans, Frans N.S. Vermaak, Stacey Proudfoot, (2013) "Structural breaks in the parameter estimates of the determinants of capital structure: Some evidence from the JSE", Meditari Accountancy Research, Vol. 21 Iss: 1, pp.68 - 84|
|Keywords:||Capital structure, Financial reforms, Parameter estimates, South Africa, Stock exchanges, Structural breaks|
|Article type:||Research paper|
|DOI:||10.1108/MEDAR-07-2012-0025 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||JEL classification – G32|
Purpose – This paper aims to test the effects of financial reforms on the structural stability of the parameter estimates in the determinants of capital structure.
Design/methodology/approach – A panel of 100 non-financial companies listed on the Johannesburg Stock Exchange is constructed, and a panel least squares estimation technique is used to test for lagged, current and leading structural breaks in the firm specific determinants of leverage.
Findings – The results show that structural reforms have a significant role in influencing the empirical relationship between leverage and its determinants. Specifically, the lifting of international sanctions and stock market liberalisation have a significant impact on the stability of the profitability, growth and tax rate variables for the book and market values of the debt to equity ratio. Furthermore, when the total and short term debt ratios are considered, only stock market liberalisation appears to have a significant influence on the stability of the profitability parameter.
Originality/value – This paper adds to the existing body of literature on capital structure by documenting the extent of structural breaks in the parameter estimates of the relationship between leverage and firm specific determinants of capital structure for listed non-financial firms in South Africa.
To purchase this item please login or register.
Complete and print this form to request this document from your librarian