Capital Structure and Corporates Financial Sustainability: Evidence from Listed Non-Financial Entities in Ghana

Yusheng Kong, Mary Donkor (), Mohammed Musah (), Joseph Akwasi Nkyi and George Oppong Appiagyei Ampong
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Yusheng Kong: School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China
Mary Donkor: School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China
Mohammed Musah: Department of Accounting, Banking, and Finance, School of Business, Ghana Communication Technology University, Accra PMB 100, Ghana
Joseph Akwasi Nkyi: Department of Accounting, Banking, and Finance, School of Business, Ghana Communication Technology University, Accra PMB 100, Ghana
George Oppong Appiagyei Ampong: Department of Accounting, Banking, and Finance, School of Business, Ghana Communication Technology University, Accra PMB 100, Ghana

Sustainability, 2023, vol. 15, issue 5, 1-20

Abstract: This study examined the nexus between capital structure and the financial sustainability of 28 listed non-financial firms in Ghana. Panel data for the period 2008 to 2019 was used for the analysis. From the results, the panel studied was heterogeneous and cross-sectionally dependent. In addition, the variables investigated were first-differenced stationary and cointegrated in the long term. The elasticities of the predictors were explored via the common correlated effects mean group (CCEMG) estimator. From the findings, capital structure proxied by the debt and debt-to-equity ratio improved the firms’ financial sustainability via the increase in return on equity (ROE). Also, firm size and assets growth promoted the entities’ financial sustainability in all the panels; however, the association between operational efficiency and the corporates’ sustainability was heterogeneous across panels. Finally, asset tangibility significantly impacted the firms’ financial sustainability. Based on the findings, the study recommended that authorities should opt for a capital structure mix that would minimize costs and optimize the firms’ financial sustainability when making capital structure decisions.

Keywords: capital structure; financial sustainability; non-financial entities; Ghana stock exchange; CCEMG estimator (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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