Capital structure and shareholders' value

Abstract

This paper empirically examines the relationship between capital structure and shareholders' value of non-financial firms listed on the Ghana Stock Exchange from 2005 to 2014. Panel regression model, specifically the estimated generalised least square (E-GLS) was used to analyse data from 11 non-financial listed firms. We find that non-financial listed firms on the Ghana Stock Exchange used more debt than equity. Debt exhibits a significant negative relationship with shareholders' value, proxy by earnings per share. Equity, however, display a significant positive relationship with shareholders' value. The study contributes to capital structure literature from the perspective of Ghana, a country characterised by high cost of borrowing and underdeveloped debt market.