The financing behaviour of firms and financial crisis

Albert Danso (The York Management School, University of York, York, UK)
Samuel Adomako (The Warwick Business School, University of Warwick, Coventry, UK)

Managerial Finance

ISSN: 0307-4358

Publication date: 1 December 2014

Abstract

Purpose

The purpose of this paper is to contribute to the capital structure literature by examining the determinants of capital structure from the context of South Africa and to provide evidence of the effects of the 2007/2008 global financial crisis on firm-level determinants of debt-equity choice.

Design/methodology/approach

This paper begins by embarking on an extensive review of literature on extant empirical research on capital structure. The panel econometric technique is further adopted to examine firm-level determinants of capital structure and also the impact of 2007/2008 financial crisis.

Findings

The findings of the paper suggest that theories of capital structure underpinning debt-equity choice of firms in developed economies are also applicable in the South African context. The authors also find a strong evidence of the effects of the financial crisis on the capital structure of firms in South Africa.

Practical implications

This paper serves as springboard on which further research can be grounded and also highlights the interaction between the South African economy and the global economy.

Originality/value

The paper provides a fresh evidence on the determinants of capital structure from the Sub-Saharan African context and to the authors’ knowledge, this is the first paper that examines the effects of the 2007/2008 financial crisis on capital structure of firms in South Africa.

Keywords

Citation

Danso, A. and Adomako, S. (2014), "The financing behaviour of firms and financial crisis", Managerial Finance, Vol. 40 No. 12, pp. 1159-1174. https://doi.org/10.1108/MF-04-2014-0098

Publisher

:

Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

To read the full version of this content please select one of the options below

You may be able to access this content by logging in via Shibboleth, Open Athens or with your Emerald account.
To rent this content from Deepdyve, please click the button.
If you think you should have access to this content, click the button to contact our support team.