Leverage and Corporate Market Value: Empirical Evidence from Zimbabwe Stock Exchange

Jambawo, Trevor

doi:10.5539/ijef.v6n4p185

Cited by 3 publications

(2 citation statements)

References 30 publications

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“…More so, the speed of adjustment and the determinants thereof differ from what has been provided in past studies. Few studies have examined the determinants of capital structure (Hove & Chidoko, 2012; Jambawo, 2014; Mutenheri & Green, 2003). However, to the best of our knowledge, none of them clarify whether firms have an optimal leverage or not and the factors that explain the speed of adjustment are not clear thus far.…”

Section: Introductionmentioning

confidence: 99%

Optimal Capital Structure and Speed of Adjustment under Hyperinflation and Dollarization

Mbulawa

Okurut

Ntsosa

et al. 2020

Global Journal of Emerging Market Economies

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Economic challenges in Zimbabwe have resulted in firms being pushed out of their optimal leverage. Firms are faced with the need to move back to the optimal level of financing to improve their value. They tend to adjust quickly to the optimal level whenever failing to do so is costlier. This study employs a dynamic capital structure model to examine the determinants of optimal leverage and the speed of adjustment under a hyperinflation and dollarization period (2000–2016). The study shows that firms have an optimal leverage and there are costs of adjusting to this level of capital. Findings are consistent with theoretical predictions of the static trade-off theory (STT) and agency theory. The adjustment factors for all the models were found to be at least 0.475 and are higher under hyperinflation than under dollarization. Both firm and macroeconomic factors explain the optimal capital structure while the former also explains the speed of adjustment. Policies focusing on improving access to and reducing costs for finance will assist firms to maximize value as they adjust to the desired financing mix. The policies adopted may vary in response to the economic environment.

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Section: Introductionmentioning

confidence: 99%

Optimal Capital Structure and Speed of Adjustment under Hyperinflation and Dollarization

Mbulawa

Okurut

Ntsosa

et al. 2020

Global Journal of Emerging Market Economies

View full text Add to dashboard Cite

show abstract

“…Nsereko & Kebonang (2005) and Ijewereme (2015) also support our finding that corruption interrupts a conducive environment for potential investors to invest in the economy of a country. It is imperative that corruption across all sectors is managed effectively considering that most of the firms in Zimbabwe rely on external investors for financing (Jambawo, 2014) and those investments bolster economic growth of the country in return (Zivengwa et al, 2011).…”

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confidence: 99%

The Most Effective Strategies to Curb Corruption and Improve Water Service Delivery in Zimbabwe

Mutuma

Jambawo

2017

JEBS

Self Cite

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The main objective of this study was to find the most effective strategies to curb and eradicate corruption and improve water service delivery. The study also aimed to present the type, causes, and effects of corruption. A mixed-methods questionnaire survey design was used to collect quantitative and qualitative data. 220 questionnaires were distributed to providers and users of water services in Zimbabwe. 149 respondents returned the completed questionnaires. Data were analysed using descriptive statistics and content analysis. The Analysis of Variance was used to test the significance of mean scores. The study revealed that corruption is highly prevalent in Zimbabwe. The main factors that cause corruption in the water sector are poor governance, economic hardship, and weak accountability. Corruption leads to economic stagnation and poor foreign investments. Organisations such as the Zimbabwe National Water Authority must improve systems and structures, enhance the auditing process, and educate staff on good ethical standards and effective governance to effectively fight against corruption and improve service delivery. They must also put in place strong governance and accountability frameworks and work closely with communities and policy makers to eradicate corruption. The availability of water should be the same across all the suburbs, and the country needs to adjust its water bill rates in line with regional rates. Service providers should make use of mobile technology to promote citizenry participation in sharing ideas and making decisions on water sustainability. This study reaffirms the need to fight corruption and improve water service delivery.

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Promoter ownership and corporate leverage: Evidence from Indian firms

Gill¹,

Obradovich²,

Mathur³

2015

COC

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A higher level of debt may help in aligning the interests of managers and shareholders; however, managers may underestimate the resulting costs of bankruptcy. Moreover, notwithstanding the tax and other benefits of debt, literature shows that firms may have more debt in their capital structure than is appropriate. A higher level of leverage becomes detrimental by increasing the chances of financial distress and, consequently, the chances of bankruptcy. This study investigated relationships between changes in promoter ownership and changes in leverage by taking a sample of 322 Indian service and manufacturing firms from Top 500 Companies listed on the Bombay Stock Exchange (BSE) for a period of five years (from 2010-2014). The results indicate that changes in promoter ownership play a role in lowering the leverage of Indian firms and, consequently, reducing the chances of bankruptcy. The findings of this study also indicate that changes in promoter ownership have more effect on the leverage of Indian service firms as compared to manufacturing firms. This study contributes to the literature on the factors that affect the leverage of the firm. The findings may be useful for financial managers, investors, financial management consultants, and other stakeholders

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Leverage and Corporate Market Value: Empirical Evidence from Zimbabwe Stock Exchange

Cited by 3 publications

References 30 publications

Optimal Capital Structure and Speed of Adjustment under Hyperinflation and Dollarization

Optimal Capital Structure and Speed of Adjustment under Hyperinflation and Dollarization

The Most Effective Strategies to Curb Corruption and Improve Water Service Delivery in Zimbabwe

Promoter ownership and corporate leverage: Evidence from Indian firms

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