Document Type Master's Dissertation Author Gangeni, Cunning URN etd-03302010-133740 Document Title The relationship between capital structure and the financial performance of the firm Degree MBA Department Gordon Institute of Business Science Supervisor
Advisor Name Title Mr G Fisher Supervisor Keywords
- financial performance
- capital structure
Date 2007-04-08 Availability unrestricted Abstract
Corporate finance literature suggests that the capital structure decision has played a pivotal role over the years in driving the establishment and growth of firms. There is also a body of evidence that financial markets take a keen interest in firm performance, especially for those listed on the stock exchange. There is no empirical evidence that there is a causal relationship between capital structure and the firmís performance despite the importance of the two concepts in corporate finance.
This study uses the debt/equity ratio as a proxy for capital structure and a selected few financial ratios to represent attributes of firm performance (e.g. profitability and shareholder value) in investigating the relationship between the two in the South African context.
The results based on stock exchange data as input are inconclusive but they lay a foundation for potential future research. Interesting insights are drawn from using some limitations identified in the literature to try and explain why the results are the way that they are.
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Please cite as follows:
Gangeni, C 2006, The relationship between capital structure and the financial performance of the firm, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-03302010-133740/ >
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