CAPITAL_STRUCTURE_QREF_2013.pdf (541.48 kB)
Capital structure, product market competition and firm performance: evidence from South Africa
This paper investigates the relationship between capital structure and firm performance, paying particular attention to the degree of industry competition. The paper applies a novel measure of competition, the Boone indicator, to the leverage-performance relationship. Using panel data consisting of 257 South African firms over the period 1998-2009, this paper examines the effect of capital structure on firm performance and investigates the extent to which the relationship depends on the level of product market competition. The results suggest that financial leverage has a positive and significant effect on firm performance. It is also found that product market competition enhances the performance effect of leverage. The results are robust to alternative measures of competition and leverage.
History
Publication status
- Published
File Version
- Accepted version
Journal
Quarterly Review of Economics and FinanceISSN
1062-9769Publisher
ElsevierExternal DOI
Issue
2Volume
53Page range
140-151Department affiliated with
- Accounting and Finance Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2022-05-11First Open Access (FOA) Date
2022-05-11First Compliant Deposit (FCD) Date
2022-05-11Usage metrics
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