Research Project Number 1 Determinants of Capital Structure

Kamugisha, Margareth (2009) Research Project Number 1 Determinants of Capital Structure. Masters thesis, The Open University of Tanzania.

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Abstract

The objective of this study was to build a model that will assist managers in determining the factors that influence decisions on Capital Structure. Therefore, the determinants of the Capital Structure decisions of 100 UK non-financial companies listed in the Financial Times All-Share Index covering the period from 1993 to 2006 has been critically analyzed. The data stream provided for this study included both, accounting data on firms and the market value of equity. SL'Ctheories in literature review were considered. Multiple Regressions Analysis was performed on the gearing being a dependent variable against a set of independent variables used as Proxies. The independent variables used are Firm Size, Asset Tangibility, Profitability, Growth Opportunities and Volatility of Earnings. Both dependent variable and independent variables were determined by computing the average over five years from 1993 and 2006. In this research, it was observed that the Firm Size, Asset Tangibility, and Volatility of Earnings are positively correlated with gearing. On the other side, Profitability and Growth Opportunities is negatively correlated with gearing. The signs of these correlations signify that the previous empirical papers and theories reviewed provide sufficient explanation on the capital structure of UK companies. The p-value of the model is significant which implies that the independent variables explain the model.

Item Type: Thesis (Masters)
Subjects: 600 Technology > 658 Gerneral management
Divisions: Faculty of Business Management > Department of Accounting and Finance
Depositing User: Mr. Administrator OUT
Date Deposited: 13 Sep 2011 09:44
Last Modified: 18 Jun 2013 09:45
URI: http://repository.out.ac.tz/id/eprint/138

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