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Issue 5(1), October 2010 -- Paper Abstracts
Girard  (p. 9-22)
Cooper (p. 23-32)
Kunz-Osborne (p. 33-41)
Coulmas-Law (p.42-46)
Stasio (p. 47-56)
Albert-Valette-Florence (p.57-63)
Zhang-Rauch (p. 64-70)
Alam-Yasin (p. 71-78)
Mattare-Monahan-Shah (p. 79-94)
Nonis-Hudson-Hunt (p. 95-106)


An Assessment of the Static Trade-off Theory of Capital Structure Using
Ghana Stock Market Data

Author(s): King A. Salami, Mohammed Iddirisu

Citation: King A. Salami, Mohammed Iddirisu, (2011) "An Assessment of the Static Trade-off Theory of Capital Structure Using Ghana Stock Market Data" Journal of Management Policy and Practice, Vol. 12, Iss. 6, pp. 81 - 89

Article Type: Research paper

Publisher: North American Business Press


The study, employing a multiple regression method, sought to examine whether the Static Trade theory
had any impact on Ghanaian companies in their decisions about capital structure during the period
2001-07. Among the study findings were, that there was negative relationship between leverage and size,
and between leverage and profitability, contrary to theoretical prediction; that the firms with tangible
fixed assets would employ high levels of leverage since tangible fixed assets have a high collateral value,
and firms with growth opportunities would take on debt to finance growth, but large and profitable firms
would use less debt or no debt at all in their capital structure, which is inconsistent with theory; and that,
most of the companies did not employ long-term debt. These have important implications for policymakers
in their quest to develop the debt market for access to long-term finance by Ghanaian companies.