Determinants of Capital Structure: Evidence from Ghanaian Firms

Abstract

This paper investigates the determinants of capital structure using dataset from 33 listed and non-listed companies during the period 2003 – 2007 in Ghana.  A multiple regression analysis of pooled-cross sectional and time-series observations have been employed in the analysis.  The results identify long-term debt to be irrelevant component of capital structure of large unquoted and quoted firms in Ghana as there is a greater reliance on equity.  Furthermore, profitability, size, business risk and tangible assets have positive correlation with level of gearing of companies in Ghana.  On the other hand, growth, and tax indicate a negative correlation with the level of gearing.

Keywords: Capital structure, financing decisions, listed, non-listed, Ghana.