الفهرس 
Background and Recent DevelopmentsOnly 14 pages are availabe for public view
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Abstract
The current thesis aims at empirically scrutinize the firm’s financing behaviour and the speed of adjustment towards the targeted capital structure as well as the influence on firm’s value in emerging markets in four emerging markets located in Europe, Middle East and Africa (EMEA), which have a different legal, financial and institutional environments, namely, Egypt, Greece, South Africa and Turkey.
Drawing upon a unique panel dataset of 339 non-financial listed firms with a total of 4,068 firm-year observations, we utilize a panel data analysis. Our analysis scrutinizes into several empirical models, which are: The partial adjustment model, as widely used to examine the dynamic capital structure. The models of Shyam-Sunder and Myers (1999) and Watson and Wilson (2002) are used to investigate the hierarchy of financing resources. Market timing model as established by Barker and Wurgler (2002) is investigated as well. A further model is also verified for capital structure and firm value. These models are estimated by utilizing several econometrics models as Pooled-OLS, Fixed effects, Random effects, Least-Squares Dummy Variables, Generalized Method of Moments system of Arellano and Bond (1991), as well as the Fama-MacBeth regression model.
Our investigation shows that the targeting behaviour is evident for all capital structure definitions and for all our sample countries. However, different speeds are observed either across countries or across leverage definitions. Overall, our estimated active SOAs – 51 percent for debt-based SOA and 55 percent for liabilities-based SOA, at least – seem so far as similar to those of firms in other developing economies. Otherwise, it’s quite different than those of firms in developed economies. We argue that the costs of deviating from optimal leverage are particularly large enough in emerging markets to keep firms closer on target by motivating the costly external capital market transactions. Concerning the basic premises of pecking order theory, our empirical findings support the first tenet of the theory in terms of that the more profitable firms are less likely to obtain external debt capital. However, we contradict the second tenet of such theory due to the probability of obtaining debt capital seems does not follow the cash flows deficit and equity financing seems commonly used by the EMEA region countries. These observations are consistent with the findings of Helwege and Liang (1996) and Fama and French (2005). With respect to verifying the market timing attempts and adverse timing, we conclude that neither the historical external market timing as established by Baker and Wurgler (2002) nor the historical equity market timing as suggested by Mahajan and Tartaroglu (2008) have the sufficient predicted impact on the corporate capital structures in EMEA region. We also find that firms issue considerable amounts of debt in periods with more promising market valuations. Lastly, our results suggest that firms engage to do the adverse timing for the equity market, as so they will issue debt in the periods when market valuations are low. Lastly, our investigation for the firm valuation effects from capital structure changes, evidence was obtained indicating that (1) findings are consistent with the trade-off theory (TOT) in terms of the existence of optimal capital structure in EMEA region; (2) the quadratic model explains the effects on firm value from capital structure much better, supporting the notion of a theory threshold for leverage. Nevertheless, unlike the N-shaped postulated by TOT and observed in developed economies, we find a U-shaped relation; (3) evidently, the relation between capital structure and firm value seems to strongly depend on the debt negative effects (i.e. distress costs) as well as the positive gains (i.e., higher efficiency) made possible by the debtholders controlling.
The current study has some limitations as so several issues have been left uninvestigated, hopefully, taken into account in the future studies as mentioned in our recommendations for the future research.