Footnote:
In: International Research Journal of Finance and Economics, 2019
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 5, 2019 erstellt
Description:
The purpose of this research is to study the dynamics of capital structure in Egypt to analyze the determinants of the speed at which Egyptian non-financial firms adjust towards target leverage.The author employs the partial adjustment model using GMM estimation technique, the model that has been extensively used in literature to study capital structure dynamics. This research uses two proxies for firm leverage to provide robust results and further evidence on employed model.Results provided robust evidence that there is target leverage determined by firmspecific determinants and political uncertainty, where Egyptian non-financial firms do adjust towards that target at a rapid speed (62 per cent). Speed of adjustment is determined by set of firm-specific determinants.This research is intended to fill literature gap where there is lack of empirical studies analyzing the determinants of speed of adjustment for Egyptian non-financial firms. Too, inclusion of political uncertainty among controlling variables falls outside the conventional use of firm-specific variables; the action that best suits the Egyptian market that was subject to political changes during the past years. Outcome of this study shall contribute to better understanding of implications of the choice of capital structure as one of the important and complex decisions in finance