Capital financing behaviour: evidence from firms listed on the Nairobi Stock Exchange

Rose Ngugi

European Journal of Finance, 2008, vol. 14, issue 7, pages 609-624

Abstract: This study investigates the determinants of capital structure for a sample of 22 firms listed on the Nairobi Stock Exchange during the period 1991-1999. Reduced form equations derived from the static trade-off model and the pecking order hypothesis are estimated and tested using panel data techniques. The results show that a pecking order model with an adjustment process cannot be rejected. Specifically, it is found that the main determinants of capital financing behaviour consist of information asymmetries, non-debt tax shields and local capital market infrastructure.

Keywords: Nairobi Stock Exchange; static trade-off model and pecking order hypothesis (search for similar items in EconPapers)
Date: 2008

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