Faculty of Commerce, Law and Management (ETDs)

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Subject: search.filters.subject.Capital structure

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    A comparative analysis of the impact of Covid-19 and the global financial crisis on capital structure: Evidence from the Johannesburg Stock Exchange
    (University of the Witwatersrand, Johannesburg, 2023) Mjeso, Thandiwe; Chipeta, Chimwemwe
    Since Modigliani and Miller (1958) introduced the modern theory of capital structure, various studies have been conducted on capital structure. This study contributes to the existing capital structure literature by investigating how the Covid-19 pandemic impacted the capital structure of Johannesburg Stock Exchange (JSE) listed non-financial firms and comparing this impact to that of the 2008 global financial crisis. Furthermore, this study seeks to determine the relationship between capital structure and fundamental firm factors (business risk, profitability, firm size, growth, and asset tangibility). To conduct this analysis, the financial data of these firms for the 2005 to 2022 period is extracted from Bloomberg and the Generalized Method of Moments (GMM) model is used to conduct the analysis of this study. The results of this study indicate that Covid-19 did not have a statistically significant impact on the capital structure of the JSE listed non-financial firms whereas, the 2008 global financial crisis had a statistically significant impact. Overall, the results of this study are consistent with the empirical evidence reported by previous studies, and they provide evidence in support of both the trade-off theory and the pecking order theory
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    The linkage between capital structure and financial performance: a case of selected technological firms listed in Johannesburg stock exchange
    (2022) Khenisa, Boipelo
    The main objective of this study is to analyse the effect of capital structure on the financial performance of technological firms listed on the Johannesburg Stock Exchange in South Africa. Cross-sectional time-series data was collected from a sample of 14 technological firms over 9 years, yielding a total of 126 observations. The Levin, Lin & Chu test was used to conduct unit root tests on financial performance, capital structure, firm size, firm growth, and macroeconomic control variables. Results indicate that some series were stationary at a level and some at first difference. While return on assets was used as a dependent variable or proxy of financial performance, and debt/equity ratio as a proxy of capital structure, the random effects model was selected in preference to the Fixed Effects model using the Hausman test. Estimates of the random effects model show that the debt/equity ratio had negative and statistically insignificant effects on firms’ financial performance positions. Conversely, the size of the organization and its growth had statistically positive and significant effects on financial performance, with firm size having a more pronounced effect relative to firm growth. The adjusted Rsquared shows that nearly 97 percent of the variation in technological firms’ financial performances is explained by capital structure, firm size, firm growth, and liquidity. Robust checks from stepwise regression results are consistent with the estimates of the random effects model. This study recommends that the management of technological firms should maintain levels of debt that are optimal to avoid the negative effects of high debt burdens on a firm’s financial performance positions.