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

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  • Rose Ngugi

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.

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  • Rose Ngugi, 2008. "Capital financing behaviour: evidence from firms listed on the Nairobi Stock Exchange," The European Journal of Finance, Taylor & Francis Journals, vol. 14(7), pages 609-624.
    • Handle: RePEc:taf:eurjfi:v:14:y:2008:i:7:p:609-624
    DOI: 10.1080/13518470802042245
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