Abstract
PurposeThis paper aims to examine how unlisted companies in Ghana finance their growth and to what extent do they rely on internal finance relative to external sources of finance. Additionally, the paper seeks to investigate the determinants of the capital structure of unlisted companies in Ghana.Design/methodology/approachThe paper uses the Singh‐Hamid methodology as well as panel data techniques to evaluate the financing decisions of unlisted companies in Ghana.FindingsThe analysis shows that unlisted firms in Ghana finance most of their growth from external debt and they are also characterized by shorter debt maturity. The results also show that the dominant factors affecting the debt equity ratios of unlisted firms in Ghana are size, firm growth, tangibility, profit margin, and financial development.Research limitations/implicationsOverall, the evidence in this paper suggests that standard models of corporate finance can be applicable to unlisted companies in Ghana.Practical implicationsInformative when planning for future development of the small business sector of the Ghanaian economy.Originality/valueProvides empirical evidence on how unlisted companies in Ghana finance their growth and what determines their capital structure.
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