We use an information asymmetry index , which is based on measures of adverse selection developed by market microstructure literature rather than on ex-ante firm characteristics, to measure the level of information asymmetry . Then we want to test how the information asymmetry, the sole and principal determinant of the pecking order theory, basically affects capital structure decision. During the period 1995-2005, We find that information asymmetry does affect firm¡¦s debt issuance positively and significantly, especially when firms¡¦ size are large and when firm¡¦s financing needs are high. Furthermore, we find there are some other determinants have important influence on firms¡¦ financing decision. This result can explain why the literatures are always only partially successful in interpreting firms¡¦ financing decisions. It also suggests that if we test models under basic assumptions, we can find some support in any theory.

This paper investigated the change in corporate debt levels in South Africa from 1994 to 2016. Included is an analysis of factors that companies take into consideration when determining the company's capital structure. This study used data from companies, largely from the mining sector, within sectors listed on the Johannesburg Stock Exchange (JSE), including chemicals, general industries, oil and gas. Four different leverage measures were used to determine the change in capital structure for the period under review, as well as six of the most commonly used determinants of capital structure. A high-level interpretation of the results reflected the following; a slight but relatively consistent increase in the use of debt relative to equity over the period for both the total sample and the mining sector. An increase in the use of long- relative to short term debt was also found, as well as a convergence between the use of current and non-current liabilities. Results from the analysis of the capital structure determinants varied, with some showing statistical significance. Asset tangibility was positively correlated to debt, while profitability and growth had a negative relationship. The relationship between company size, tax and cost of debt and leverage was varied.

This paper aims to investigate the change in corporate debt levels in South Africa from 1994 to 2016, included is an analysis of factors that firms take into consideration when determining the company’s capital structure. This study uses data from firms in the Real Estate and REIT, Travel and Leisure and Construction and Materials sectors listed on the Johannesburg Stock Exchange (JSE). Four different leverage measures are used to determine the change in capital structure for the period under review, as well as six of the most commonly used determinants of capital structure. A high level interpretation of the results reflected the following; an increase in the use of debt in the Travel and Leisure and Construction and Materials Sectors, however a significant decrease in the use of debt relative to equity was seen in the Real Estate and REIT Sector thus skewing the Total Sample findings considerably. An increase in the use of long term debt relative to short term was also found. Results from the analysis of the capital structure determinants varied, with some determinants showing statistical significance. The following determinants were positively related to debt; firm size, asset tangibility and growth while the determinants; cost of debt and tax had a negative relationship. The relationship between profitability and leverage was varied.

The share of corporate saving in total saving in South Africa has increased during the past four decades. In this dissertation various economic theories are examined in order to try to explain this change and to determine the possible implications of this change. The conclusion is that the relationship between the investment decision of companies and their savings decision is governed by the determinants of the financing choice of firms. These include cost, risk, control and availability. If, because of these factors, firms prefer to finance investment with retained earnings, there is a relationship between investment and the level of corporate saving. The degree to which the investment decision is dependent on the availability of internal financing will determine the importance of the level of corporate saving in a country. / Oor die afgelope vier dekades het die aandeel van maatskapybesparing in die totale besparing in Suid-Afika toegeneem. In hiersie vehandeling word veskillende ekonomiese teoriee ondersoek ten einde hierdie verandering te probeer veklaar en te probeer vasstel wat die implikasies van hierdie veandering is. Die gevolgtrekking waartoe gekom word, is dat die verband tussen die investeringsbeleid en die maatskappye se besparingsbesluit bepaal word deur faktore wat die finansieringskeuse van die firmas beinvloed, naamlik koste, risiko, beheer en beskikbaarheid. Indien hierdie faktore daartoe lei dat die maatskapye verkies om investering met terruggehoue bespaaring the finansier, is daar 'n verband tussen investering en die vlak van maatskappybesparing. Die mate waarin die investeringsbesluit afhanklik is van die beskikbaarheid van interne finansiering, sal bepaal hoe belangrik die vlak van maatskappybesparing in 'n land is. / Economics and Management Sciences / M.Com.

The share of corporate saving in total saving in South Africa has increased during the past four decades. In this dissertation various economic theories are examined in order to try to explain this change and to determine the possible implications of this change. The conclusion is that the relationship between the investment decision of companies and their savings decision is governed by the determinants of the financing choice of firms. These include cost, risk, control and availability. If, because of these factors, firms prefer to finance investment with retained earnings, there is a relationship between investment and the level of corporate saving. The degree to which the investment decision is dependent on the availability of internal financing will determine the importance of the level of corporate saving in a country. / Oor die afgelope vier dekades het die aandeel van maatskapybesparing in die totale besparing in Suid-Afika toegeneem. In hiersie vehandeling word veskillende ekonomiese teoriee ondersoek ten einde hierdie verandering te probeer veklaar en te probeer vasstel wat die implikasies van hierdie veandering is. Die gevolgtrekking waartoe gekom word, is dat die verband tussen die investeringsbeleid en die maatskappye se besparingsbesluit bepaal word deur faktore wat die finansieringskeuse van die firmas beinvloed, naamlik koste, risiko, beheer en beskikbaarheid. Indien hierdie faktore daartoe lei dat die maatskapye verkies om investering met terruggehoue bespaaring the finansier, is daar 'n verband tussen investering en die vlak van maatskappybesparing. Die mate waarin die investeringsbesluit afhanklik is van die beskikbaarheid van interne finansiering, sal bepaal hoe belangrik die vlak van maatskappybesparing in 'n land is. / Economics and Management Sciences / M.Com.

In this paper, an attempt has been made to examine the evolution of corporate leverage of companies listed on the Johannesburg Stock Exchange (JSE) from 1994 to 2016. Analysis of the data set is organized around a sample of 126 listed companies across twelve sub-sector industries, namely, Banks, Financial Services, Life Insurance, Fixed Line Telecommunications, Nonlife Insurance, Health Care Equipment and Services, Pharmaceuticals and Biotechnology, Media, Technology Hardware and Equipment, Software and Computer Services, Electronic and Electrical Equipment and Support Services. 621 delisted companies were also briefly analysed to eliminate survivorship bias. Results of multiple regressions using two primary leverage measures and six commonly used determinants of capital structure were varied. Tangibility and growth were negatively related to debt while cost of debt was positively related to debt. Firm size, profitability and corporate tax rate yielded a varied relationship with corporate leverage. Only the growth capital structure determinant showed statistical significance. The overall findings indicate a rise in corporate leverage that coincides in tandem with major local and international economic events.