3. Electronic Theses and Dissertations (ETDs) - All submissions

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    Determinants of capital structure for the projects funded by international financial institutions: the case of IFAD projects
    (2014-01-15) Rurangangabo, Jean Bosco
    This study seeks to establish determinants of capital structure for the projects funded by international financial institutions using IFAD projects as case studies. Specifically, we seek to find out the determinants of capital structure for projects funded by IFAD; the correlation between the life span of the project and its total budget; the correlation between the total capital and the number of households directly benefiting from the project; and the correlation between the country’s capacity of mobilizing loans and grants with its level of political stability, level of accountability, government effectiveness and the control of corruption. Data from 81 projects funded by IFAD between 1999 and 2011 in Sub-Saharan Africa (SSA), Middle-East and North Africa (MENA) region, Asia and South America was collected. The determinants were then examined from the distinctions of firm specific and country specific groupings and analyzed using a least-square dummy variable (LSDV) approach to reveal the regional-effects. The correlation analysis revealed that the association between total capital and the duration of the project is insignificant ( ) whereas between the total capital and the number of beneficiary households is highly and positively correlated with and . In addition, correlation between total capital and the level of Political Stability, the Voice and Accountability, and the level of Corruption is insignificant. Moreover, the results of LSDV showed that the number of benefiting household is a highly significant determinant of the NPOs capital structure ( ) together with Voice and Accountability ( ) as well as Corruption ( ). In contrast, project duration and the level of political stability were not important determinants of capital structure. The results of this analysis provide confirmatory evidence that the size of the project has a highly positive effect on the size of the capital, but significantly negative on the ability to borrow whereas only voice and accountability together with control of corruption have a significant relationship with the ability to mobilize capital for the project. Therefore, we conclude that the corporate capital structure theory, that is mostly applied in the business firms, is still applicable in iv project finance but with exceptions. Therefore, we implore that more studies should be done focusing on different types of NPOs to firmly understand the determinants of debt in NPOs.
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    The capital structure and its impact on firm value of JSE securities exchange listed companies
    (2013-08-27) Mohohlo, Neo Rose
    The capital structure theory was pioneered by Modigliani and Miller (1958). In their study, Modigliani and Miller (1958) argued that capital structure was irrelevant to firm value. There is also significant theory on the capital structure of firms and its determinants. Using a panel of non-financial firms listed on the JSE Securities Exchange, we investigate the relevance of capital structure on firm value and investigate the capital structure of firms in South Africa. The results of the analysis on the relevance of capital structure on firm value indicated that there is no statistically significant relationship between firm value and the capital structure of firms. This analysis was conducted for the general sample of firms in the study, within industries and by firm size, however, the results were consistent throughout all the analysis. The results of the capital structure and its determinants analysis indicated that South African firms followed a pecking order theory. The results also indicated that profitability, size, asset tangibility and tax shield has a statistically significant relationship to gearing or the firm’s capital structure. The analysis of the South African firms’ capital structure indicated that firms in South Africa tend to use more long-term debt than short-term debt. The leverage ratios also differed among industries with the Health care industry having the highest levels of leverage and the Technology industry having the lowest levels of leverage.
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    Internal liquidity, capital structure and firm profitability: a case for the South African listed real estate industry
    (2013-07-26) Cook, Adam Barry
    This study analyses data for the top ten listed real-estate firms in South Africa to examine the relationships that exist between Internal Liquidity, Capital Structure and Firm Profitability. The ten firms under study represent 79% of the industry by market capitalisation. Other than in six unique cases out of the thirty regressions run, results show that there is little relationship between the variables. These six however, all fall within the test of Internal Liquidity on the firm’s Capital Structure. Results indicate that the level of Internal Liquidity has explanatory power on the level of debt used by the listed real-estate firm. Interestingly, results also show that the market’s perception of a listed real-estate firm is independent of its capital structure and its cash on hand. It is further implied that firms in South Africa with property as the majority asset, are under-geared as a result. This study supports the stakeholder co-investment theory to explain the low average debt levels in South Africa.
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    Impact of working capital on the profitability of South African firms listed on the Johannesburg Stock Exchange
    (2013-02-20) Ncube, Mkhululi
    This study examines the influence of working capital management components on the profitability of South African firms listed on the Johannesburg Stock Exchange (“JSE”). In addition, the study investigates how the influence of the selected working capital management components changes as macroeconomic conditions change. The study used accounting based secondary data obtained from I-Net Bridge and BF McGregor for 254 firms from 2004 to 2010. The Pooled Ordinary Least Squares (“OLS”) regression models were used in the analyses. The key findings from the study indicate the following: (1) that there exists a significant negative relationship between the net time interval between actual cash expenditures on a firm‟s purchase of productive resources and the ultimate recovery of cash receipts from product sales (cash conversion cycle) and profitability. This negative relationship suggests that managers can create value for the shareholders of the firm by reducing the cash conversion cycle; (2) that there exists a significant negative relationship between days sales in receivables and profitability. This indicates that slow collection of accounts receivables is associated with low profitability and suggests that corporate managers can improve profitability by reducing credit period granted to their customers; (3) that an increase in the length of a firm‟s cash (operating) cycle tends to increase profitability during an economic recession than during an economic boom. This result indicates that firms adopt a more generous trade credit policy during an economic recession than during a boom in an attempt to boost sales which would ordinarily dwindle during a recession. The implication of this positive relationship in comparison with a negative relationship between the normal cash conversion cycle and profitability is that corporate managers need to streamline their trade credit policy and change it accordingly as the macroeconomic environment changes in ensuring that the company‟s sales are not adversely impacted as economic conditions change. Furthermore, the study finds that there exists a highly significant negative relationship between profitability and the following respective ratios: days payables outstanding, current ratio, and capital structure. The negative relationship found between profitability and debt to equity ratio (used as a proxy for capital structure) indicates that South African firms‟ profitability tends to decrease at excessively high and increasing levels of debt.
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