Original Research

Financial liberalisation and the dynamics of firm leverage in a transitional economy: evidence from South Africa

Chimwemwe Chipeta, Hendrik Wolmarans, Frans Vermaak
South African Journal of Economic and Management Sciences | Vol 15, No 2 | a152 | DOI: https://doi.org/10.4102/sajems.v15i2.152 | © 2012 Chimwemwe Chipeta, Hendrik Wolmarans, Frans Vermaak | This work is licensed under CC Attribution 4.0
Submitted: 31 January 2011 | Published: 05 June 2012

About the author(s)

Chimwemwe Chipeta, Universityof the Witwatersrand, South Africa
Hendrik Wolmarans, University of Pretoria, South Africa
Frans Vermaak, Univesity of Pretoria, South Africa

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Abstract

This paper examines the dynamics of corporate capital structures for listed non-financial firms in South Africa. The dynamic models of capital structure have been utilised to document several findings of empirical significance. First, transaction costs reduce dramatically in the post liberalisation regime, and the associated speed of adjustment is more pronounced, and statistically significant for the post liberalisation epoch. Second, financial liberalisation has a significant impact on the capital structure speed of adjustment. Third, the results confirm most of the theoretical predictions of capital structure theories; however, the relationship is more significant in the post liberalised regime. Finally, new evidence has been revealed on what determines the debt maturity structure of firms in a transitional economy.


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Crossref Citations

1. In search of conclusive evidence on the trade-off and pecking order theories of capital structure: Evidence from the Johannesburg Stock Exchange
Chimwemwe Chipeta, David McClelland
Investment Analysts Journal  vol: 47  issue: 1  first page: 15  year: 2018  
doi: 10.1080/10293523.2017.1412608