Capital structure and firm characteristics: an empirical analysis from Egypt

Mohammed Omran and John Pointon

Review of Accounting and Finance, 2009, vol. 8, issue 4, 454-474

Abstract: Purpose - The aim of this paper is to investigate differences in capital structures across industries in Egypt paying particular attention to: corporate characteristics, such as liquidity, asset structure, growth, and size; fiscal characteristics, namely, the application of differential corporate tax rates; and stock market activity. Design/methodology/approach - Comparisons are made between the four main industrial sectors: food, heavy industries, contracting and services. For each industry four aspects of capital structure are assessed. Firms are also classified according to whether their shares are actively traded on the Egyptian stock market. Multiple regressions are run to test a range of hypotheses. ANOVA and multiple comparison procedures are also employed. Findings - Across Egyptian firms, higher business risks do not generally result in lower levels of long‐term capital structure. The contracting sector is significantly different from food, heavy industries and services in its determinants of its short‐term financing and interest ratios. The sector also has a higher level of debt, and so a hypothesised tax‐induced higher debt level for the services sector, which has the highest corporate tax rate, is rejected. Asset‐backing is particularly important in heavy industries, and in non‐actively traded firms. Size and growth are positively related to short‐term financing in heavy industries and services. Originality/value - The value lies in the comprehensiveness of the study, covering both short‐ and long‐term capital structures across industries, both income measures and capital indebtedness, and distinctions according to whether the shares are actively traded or not.

Keywords: Corporate finances; Capital structure; Stock markets; Taxes; Egypt (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:rafpps:v:8:y:2009:i:4:p:454-474

DOI: 10.1108/14757700911006976

Access Statistics for this article

Review of Accounting and Finance is currently edited by Nawazish Mirza

More articles in Review of Accounting and Finance from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().