EconPapers    
Economics at your fingertips  
 

Debt policy and performance of SMEs: Evidence from Ghanaian and South African firms

Joshua Abor

Journal of Risk Finance, 2007, vol. 8, issue 4, 364-379

Abstract: Purpose - The purpose of this research is to examine the effect of debt policy (capital structure) on the financial performance of small and medium-sized enterprises (SMEs) in Ghana and South Africa. Previous studies, especially on large firms, have shown that capital structure affects firm performance. Though the issue has been widely studied, largely missing from this body of literature is the focus on SMEs. Design/methodology/approach - Panel data analysis is used to investigate the relations between measures of capital structure and financial performance. Findings - Using various measures of performance, the results of this study indicate that capital structure influences financial performance, although not exclusively. By and large, the results indicate that capital structure, especially long-term and total debt ratios, negatively affect performance of SMEs. This suggests that agency issues may lead to SMEs pursuing very high debt policy, thus resulting in lower performance. Originality/value - The main value of this paper is the analysis of the effect of debt policy on the performance of SMEs in Ghana and South Africa.

Keywords: Debts; Capital structure; Small to medium-sized enterprises; Ghana; South Africa (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (26) Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/10.1108/152659407107 ... RePEc&WT.mc_id=RePEc (text/html)
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:jrfpps:v:8:y:2007:i:4:p:364-379

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://emeraldgroupp ... /journals.htm?id=jrf

Access Statistics for this article

Journal of Risk Finance is currently edited by Bonnie Buchanan

More articles in Journal of Risk Finance from Emerald Group Publishing
Bibliographic data for series maintained by Virginia Chapman ().

 
Page updated 2020-12-26
Handle: RePEc:eme:jrfpps:v:8:y:2007:i:4:p:364-379