Email this article 
Hide
Show all
Original Research
The corporate uses of debt
South African Journal of Business Management | Vol 26, No 3 | a828 |
DOI: https://doi.org/10.4102/sajbm.v26i3.828
| © 2018 Sinclair Davidson, Laurence Rapp
| This work is licensed under CC Attribution 4.0
Submitted: 15 October 2018 | Published: 30 September 1995
Submitted: 15 October 2018 | Published: 30 September 1995
About the author(s)
Sinclair Davidson, Department of Business Economics, School of Economic and Business Studies, University of the Witwatersrand, South AfricaLaurence Rapp, Department of Business Economics, School of Economic and Business Studies, University of the Witwatersrand, South Africa
Full Text:
PDF (1MB)Abstract
In this article we consider the use of debt by South African firms. There are two possible uses of debt: firstly, it is a method of raising finance and secondly, a method of corporate governance. Within the South African corporate environment it is not clear whether firms would use debt for both or either of these purposes. We are unable to find evidence in favour of Modigliani and Miller's proposition one or proposition two. It appears that firms do not use debt for corporate governance purposes and we present evidence that there could be an agency problem inherent within the structure of South African business.
Keywords
No related keywords in the metadata.
Metrics
Total abstract views: 2506Total article views: 883
Crossref Citations
1. Determinants of Reputational Signalling in South Africa
S. Davidson
South African Journal of Economics vol: 66 issue: 1 first page: 43 year: 1998
doi: 10.1111/j.1813-6982.1998.tb01064.x
2. Is The Negative Relationship Between Debt Levels and Investment Opportunities Robust to Non-Debt Tax Shields? Evidence From South Africa
S Davidson
Studies in Economics and Econometrics vol: 21 issue: 2 first page: 69 year: 1997
doi: 10.1080/03796205.1997.12129109
3. Financial Leverage and Shareholder’s Required Returns: Evidence from South Africa Corporate Sector
B. T. Matemilola, A. N. Bany-Ariffin, W. N. W. Azman-Saini
Transition Studies Review vol: 18 issue: 3 first page: 601 year: 2012
doi: 10.1007/s11300-012-0214-x