Determinants of capital structure: A South African study

Abstract

The effect of firm characteristics and economic factors on capital structures have been researched in many countries. Various South African studies have been conducted on this topic; however, limited research was found where both firm characteristics and economic factors were included in the same study. The majority of previous South African studies were also conducted prior to the demise of apartheid in 1994. This paper, therefore, focuses on the post-apartheid period from 1995 to 2008 and investigates the effect of firm characteristics and economic factors on the capital structure of listed industrial firms in South Africa. Empirical results indicate that these factors do affect capital structure and that asset structure and size are the two most dominant determinants.