Determinants of capital structure of listed firms in Ghana : empirical evidence using a dynamic system GMM

The main aim of this study is to empirically investigate the factors influencing the capital structure decisions of listed firms in Ghana. In examining the determinants of capital structure, 28 firms listed on the Ghana Stock Exchange were used for a time period of 8years, spanning from 2007-2014. We employed a dynamic panel system of General Methods of Moments (GMM) in testing the hypotheses. The results from the empirical estimation revealed that listed firms in Ghana use less debt that equity and they prefer using short-term debt rather than long-term debt in financing their operations. The study also finds a significant positive relationship between tangibility of firms, liquidity, managerial ownership, firm size and long-term debt ratio. However, we find that profitability, growth opportunities, firm age, and business risk relate negatively with long-term debt ratio for listed firms in Ghana.