This study examines the divide between finance theory and practice by analysing the
significance of the determinants of capital structure choice among 123 listed firms on the JSE, to
determine whether these firms follow the trade-off theory or the pecking-order theory.
Data obtained from McGregor’s Bureau of Financial Analysis database was analysed using
standard multiple regressions, stepwise regressions and ANOVA techniques to test for financing
behaviour. The results indicated that the trade-off model has both cross-sectional and time-series
explanatory power for explaining the financing behaviour, while tests on the pecking-order
model were weak. The results further revealed a significant positive correlation between debt
financing and financial distress, and a significant negative correlation between debt financing
and the collateral value of assets during the period under study (1995-2005).
These findings suggest a divergence between finance theory and practice for JSE listed firms and
manifest conflicting ideologies between finance practices of developed and developing
economies. / Business management / M. Com. (Business Management )
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:unisa/oai:uir.unisa.ac.za:10500/3439 |
| Date | 11 1900 |
| Creators | Kasozi, Stephen Jason |
| Contributors | Ngwenya, Maluleka Samson |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Dissertation |
| Format | 1 online resource (ix, 140 leaves : ill.) |
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