- Title
- A framework for capital structure decision-making in South African businesses
- Creator
- Du Toit, Jan Lodewicus
- Subject
- Corporations -- Finance -- South Africa
- Subject
- Business enterprises -- South Africa Decision making
- Date Issued
- 2019
- Date
- 2019
- Type
- Thesis
- Type
- Masters
- Type
- MBA
- Identifier
- http://hdl.handle.net/10948/39567
- Identifier
- vital:35291
- Description
- The research is undertaken to understand how businesses make their capital structure decisions by identifying and evaluating the factors to be considered in making capital structure decisions in South African businesses. Qualitative research methods are used in two phases. In phase one, a literature review is conducted to create a framework of strategic aspects to consider when making capital structure decisions. In phase two the framework is evaluated by conducting in-depth interviews. The purpose of phase two is to identify the strategic aspects that are considered in the South African business context. The literature overview identified twelve strategic aspects for consideration when making capital structure decisions, namely business risk, control, flexibility, growth rate, long-run viability, management constraints, management conservatism, market conditions, rating agencies, size, taxation and transactional cost. The framework of twelve strategic aspects to be considered when making capital structure decisions was empirically evaluated by means of interviews. The interview responses regarding the initial twelve strategic aspects were coded and three themes emerged, namely critical strategic decision-making factors (business risk, financial flexibility, tax advantage, and volatility of earnings cash flows); factors relating specifically to markets in South Africa (growth rate, long-term viability, market conditions, credit rating, and transaction costs) and autonomy of the decision-making process (control, management constraints, managerial conservatism, and size). During the interview process, it was indicated that the autonomy of the decision-making process theme (control structure, management constraints, managerial conservatism and business size) do not form part of the strategic capital structure decision-making process in their companies and should be omitted. The interviewees highlighted four additional themes that may affect their capital structure decisions, namely government interference in the market and in the local business; Black Economic Empowerment (BEE) rating; political stability, and state capture. The study suggests a proposed framework consisting of six themes that can be used to guide capital structure decisions in South Africa businesses.
- Format
- ix, 79 leaves
- Format
- Publisher
- Nelson Mandela University
- Publisher
- Faculty of Business and Economic Sciences
- Language
- English
- Rights
- Nelson Mandela University
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| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details Download | SOURCE1 | J.L. DU TOIT.pdf | 630 KB | Adobe Acrobat PDF | View Details Download |