Business, Management and Accounting
4 years ago

Egyptian firms face hurdles in reaching optimal capital structure targets

International Journal of Financial Research
Target Capital Structure of Egyptian Listed Firms: Importance of Growth and Risk Factors
Aly Saad Mohamed Dawood, Mahmoud Otaify

Paper Summary

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The study looked at what factors influence how Egyptian companies decide how much debt to use. They found that political risk, profitability, and stock market returns affect how much debt companies use. Investment opportunities and tax benefits from not using debt also play a big role. Risk factors like firm size and business risk also impact debt decisions. Economic growth and stock market volatility don't seem to have much effect. Egyptian companies take about 2.7 to 4.4 years to adjust their debt levels to where they want them to be.