Kapaya,, Saganga Mussa
(2017)
Capital Structure Variability of Firms Listed on the Dar es Salaam Stock Exchange: Assessing the Role of Product Diversification.
["eprint_fieldopt_thesis_type_phd" not defined] thesis, The Open University of Tanzania.
Abstract
This study investigated the capital structure variability of firms listed on the Dar es Salaam Stock Exchange by assessing the role of product diversification. It was led by four objectives and tested ten hypotheses. The objectives were; to assess the levels of capital structure variability, product diversification variability, effect of conventional factors on capital structure variability and effects of product diversification on capital structure variability of firms listed in Tanzania. The study employed an unbalanced panel data of 11 listed campanies from 1997 to 2014, making a total of 128 firm years. It used both static and dynamic regression analyses. The results indicated that capital structures of companies in the sample varied over time and across companies. Product diversification in its various types indicated variability over time and across companies. Both total product diversification and unrelated product diversifications were significantly positively related to capital structure. Related product diversification was significantly negatively related to capital structure. Asset tangibility, growth opportunity and non-debt tax shield were positively and significantly related to capital structure. Company size, risk of bankruptcy and going concern were either positively or negatively related to capital structure depending on the group of analysis involved. Profitability was negatively related to capital structure. Firms in Tanzania need to take into accounts product diversification among other capital structure determinants when planning for capital structure of their firms. The type of product diversification undertaken by a firm matters in capital structure decisions. Thus, managers need to consider their potential effects in managing the firms’ capital structure.
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