In the finance literature, there has been an increasing interest on what are the determinants of capital structure of firms; the determinants of capital structure of more developed economies are the main concern of the existing literature. This proposal aims to expand this literature by ascertaining the determinants of capital structure in an emerging economy like Egypt. In this research, regression analysis is used to test the relationship between a defined set of determinants and capital structure decisions.
Cite this paper
Hussein, A. R. , Sakr, A. and Barie, A. A. (2019). The Determinants of Capital Structure: Evidence from Egyptian Listed Firms. Open Access Library Journal, 6, e5671. doi: http://dx.doi.org/10.4236/oalib.1105671.
Modigliani, F. and Miller, M.H. (1958) The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review, 48, 261-297.
Kraus, A. and Litzenberger, R.H. (1973) A State-Preference Model of Optimal Financial Leverage. The Journal of Finance, 28, 911-922. https://doi.org/10.1111/j.1540-6261.1973.tb01415.x
Jensen, M.C. and Meckling, W.H. (1976) Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305-360. https://doi.org/10.1016/0304-405X(76)90026-X
Myers, S.C. and Majluf, N.S. (1984) Corporate Financing and Investment Decisions When Firms Have Information That Investors Do Not Have. Journal of Financial Economics, 13, 187-221. https://doi.org/10.1016/0304-405X(84)90023-0
DeAngelo, H. and Masulis, R.W. (1980) Optimal Capital Structure under Corporate and Personal Taxation. Journal of Financial Economics, 8, 3-29. https://doi.org/10.1016/0304-405X(80)90019-7
Grossman, S.J. and Hart, O.D. (1982) Corporate Financial Structure and Managerial Incentives. In: The Economics of Information and Uncertainty, University of Chicago Press, Chicago, 107-140.
Demsetz, H. (1983) The Structure of Ownership and the Theory of the Firm. The Journal of Law and Economics, 26, 375-390. https://doi.org/10.1086/467041
Friend, I. and Lang, L.H. (1988) An Empirical Test of the Impact of Managerial Self-Interest on Corporate Capital Structure. The Journal of Finance, 43, 271-281. https://doi.org/10.1111/j.1540-6261.1988.tb03938.x
Berger, P.G., Ofek, E. and Yermack, D.L. (1997) Managerial Entrenchment and Capital Structure Decisions. The Journal of Fi-nance, 52, 1411-1438. https://doi.org/10.1111/j.1540-6261.1997.tb01115.x
Short, H., Keasey, K. and Duxbury, D. (2002) Capital Structure, Management Ownership and Large External Shareholders: A UK Analysis. International Journal of the economics of Business, 9, 375-399. https://doi.org/10.1080/1357151021000010382
Farooq, O. and Satt, H. (2014) Does Analyst Following Improve Firm Performance? Evidence from the MENA Region. Corporate Ownership & Control, 11, 157-166. https://doi.org/10.22495/cocv11i2c1p1
Zou, H. and Xiao, J.Z. (2006) The Financing Behaviour of Listed Chinese Firms. The British Accounting Review, 38, 239-258. https://doi.org/10.1016/j.bar.2006.04.008
Gurunlu, M. and Gursoy, G. (2010) The Influence of Foreign Ownership on Capital Structure of Non-Financial Firms: Evidence from Istanbul Stock Exchange. IUP Journal of Corporate Governance, 9, 21-29.
Kester, W.C. (1986) Capital and Ownership Structure: A Comparison of United States and Japanese Manufacturing Corporations. Financial Management, 15, 5-16. https://doi.org/10.2307/3665273
King, M.R. and Santor, E. (2008) Family Values: Ownership Structure, Performance and Capital Structure of Canadian Firms. Journal of Banking & Finance, 32, 2423-2432. https://doi.org/10.1016/j.jbankfin.2008.02.002
Chaganti, R. and Damanpour, F. (1991) Institutional Ownership, Capital Structure, and Firm Performance. Strategic Management Journal, 12, 479-491. https://doi.org/10.1002/smj.4250120702
Hussain, M.Q. and Nivorozhkin, E. (1997) The Capital Structure of Listed Companies in Poland (No. 97-175). International Monetary Fund, Washington DC. https://doi.org/10.5089/9781451976342.001
Li, K., Yue, H. and Zhao, L. (2009) Ownership, Institutions, and Capital Structure: Evidence from China. Journal of Comparative Economics, 37, 471-490. https://doi.org/10.1016/j.jce.2009.07.001
Moon, H.C. and Roehl, T.W. (2001) Unconventional Foreign Direct Investment and the Imbalance Theory. International Business Review, 10, 197-215. https://doi.org/10.1016/S0969-5931(00)00046-9
Pound, J. (1988) Proxy Contests and the Efficiency of Shareholder Oversight. Journal of Financial Economics, 20, 237-265. https://doi.org/10.1016/0304-405X(88)90046-3
Stulz, R. (1988) Managerial Control of Voting Rights: Financing Policies and the Market for Corporate Control. Journal of Financial Economics, 20, 25-54. https://doi.org/10.1016/0304-405X(88)90039-6
Shleifer, A. and Vishny, R.W. (1986) Large Shareholders and Corporate Control. Journal of Political Economy, 94, 461-488. https://doi.org/10.1086/261385
Wiwattanakantang, Y. (1999) An Empirical Study on the Determinants of the Capital Structure of Thai Firms. Pacific-Basin Finance Journal, 7, 371-403. https://doi.org/10.1016/S0927-538X(99)00007-4
Brailsford, T.J., Oliver, B.R. and Pua, S.L. (2002) On the Relation between Ownership Structure and Capital Structure. Accounting & Finance, 42, 1-26. https://doi.org/10.1111/1467-629X.00001
Fosberg, R.H. (2004) Agency Problems and Debt Financing: Leadership Structure Effects. Corporate Governance: The International Journal of Business in Society, 4, 31-38. https://doi.org/10.1108/14720700410521943
Shin-Ping, L. and Tsung-Hsien, C. (2009) The Determinants of Corporate Performance: A Viewpoint from Insider Ownership and Institutional Ownership. Managerial Auditing Journal, 24, 233-247. https://doi.org/10.1108/02686900910941122
Bennedsen, M. and Wolfenzon, D. (1998) The Balance of Power in Close Corporations (No. 1998-15). University of Copenhagen, Department of Economics, Centre for Industrial Economics, K?ben-havn.
Denis, D.J., Denis, D.K. and Sarin, A. (1997) Ownership Structure and Top Executive Turnover. Journal of Financial Economics, 45, 193-221. https://doi.org/10.1016/S0304-405X(97)00016-0
Abor, J. (2007) Cor-porate Governance and Financing Decisions of Ghanaian Listed Firms. Corporate Gov-ernance: The International Journal of Business in Society, 7, 83-92. https://doi.org/10.1108/14720700710727131
Bajaj, A. and Nidumolu, S.R. (1998) A Feedback Model to Understand Information System Usage. Information & Management, 33, 213-224. https://doi.org/10.1016/S0378-7206(98)00026-3
Firth, M. (1995) The Impact of Institutional Stockholders and Managerial Interests on the Capital Structure of Firms. Managerial and Decision Economics, 16, 167-175. https://doi.org/10.1002/mde.4090160207
Jensen, G.R., Solberg, D.P. and Zorn, T.S. (1992) Simultaneous Determination of Insider Ownership, Debt, and Dividend Policies. Journal of Financial and Quantitative Analysis, 27, 247-263. https://doi.org/10.2307/2331370
Hardjopranoto, W. (2006) Interdependent Analysis of Leverage, Dividend, and Managerial Ownership Policies: Agencies Perspectives. Gadjah Mada International Journal of Business, 8, 179-199. https://doi.org/10.22146/gamaijb.5619