Capital structure determinants in South Africa: A quantile regression approach

Abstract

Using data on 239 listed South African firms and covering the period 1996-2010, we apply a quantile regression approach to investigate the effect of capital structure determinants on leverage. The paper’s main contribution is to assess the effect of the predictor variables across the distribution of leverage. That is, does the effect of a capital structure determinant vary at different levels of leverage? With the exception of asset tangibility and age, whose effect increased with leverage, our results suggest that the importance of leverage determinants does not vary with leverage. This is an important result, as it suggests that for the case of South Africa, studies that estimate the correlates of leverage at the mean are still valid and appropriate.