The Ex-ante/Ex-post Perspectives of the Determinants of Capital Structure: An Integrated Analysis Approach
Journal of Finance and Accounting
Volume 5, Issue 1, January 2017, Pages: 12-23
Received: Dec. 20, 2016; Accepted: Dec. 28, 2016; Published: Jan. 21, 2017
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Tibuhinda Ngonzi, Department of Accountancy and Finance, St. Augustine University of Tanzania, Mwanza, Tanzania
Andrew Jisaba, Department of Accountancy and Finance, St. Augustine University of Tanzania, Mwanza, Tanzania
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The implementation of capital structure decisions may take place at a point in time, while their effects are realized over time. The predisposition of the capital structure modifying factors as its ‘determining variables’ has an implication of posing the variables as drivers of capital structure decisions. However, the evidence research in corporate finance centres on determining variables ex-post at the influence of positive accounting theory and the presumptions of the tradeoff and pecking order theories. The impact of this perspective is realized in theoretical and operational controversies. This study uses ordinal regression to handle an integrated analysis of lagged variables on debt and investment opportunity financing and managerial subjective data to investigate their impact on capital structure. The outcome is such that there is no emergent pattern to suggest that there is any pecking order or capital structure monitoring, which drives decisions on capital structure a prior. The study suggests an understanding of the ‘determinants of capital structure’ as factors that operate in-situ to modify the proportions of capital and debt in assets through market driven financial transactions.
Ex-post, Ex-ante, Capital Structure, Integrated Analysis, In-Situ
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Tibuhinda Ngonzi, Andrew Jisaba, The Ex-ante/Ex-post Perspectives of the Determinants of Capital Structure: An Integrated Analysis Approach, Journal of Finance and Accounting. Vol. 5, No. 1, 2017, pp. 12-23. doi: 10.11648/j.jfa.20170501.12
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