Effects of firm-specific factors on Capital structure: the case of some Selected private insurance companies of Ethiopia
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Date
2018-09
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Addis Ababa University
Abstract
The purpose of this study was to examine the effects of firm specific factors on leverage in
private insurance companies of Ethiopia. Major concepts used in this study like leverage,
tangibility, profitability, liquidity, firm size were operationally defined and some theories of
capital structure like trade-off theory, pecking order theory and agency theory were
reviewed. Quantitative research method mainly descriptive design was employed for this
study. Secondary data were collected from nine private insurance companies of Ethiopia
which were selected purposely as a sample and quantitative data were generated. Then to
analyze the data, appropriate methods of data analysis were employed. The main findings of
the study indicated that there was a statistically significant correlation between leverage
and tangibility, leverage and profitability as well as leverage and size of the firm. In
addition, using multiple linear regression analysis, this study also indicated that four firm
specific factors (tangibility, profitability, liquidity and firm size) explained 24.5% of the
variance in the dependent variable (Leverage). Based on the findings, important
recommendations like private insurance companies of Ethiopia should choose their capital
structure by balancing the advantages of borrowing were made for improving the
effectiveness, success and decision of the best capital structure of insurance companies in
Ethiopia.
Description
The thesis submitted in partial fulfillment of
Requirement for master of executive business
and administration (EMBA)
Keywords
Capital Structure, Effect, Factors, Insurance