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An empirical study of the impact of macroeconomic variables on the capital structure of South African firms during periods of heightened economic uncertainty
In this empirical research, the impact of national debt to GDP (and other selected macroeconomic variables) on the capital structure of South African firms is investigated during a period of heightened economic uncertainty. Economic uncertainty, as defined in this study, refers to the degree of unpr...
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| Format: | Thesis |
| Language: | English English |
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Department of Finance and Tax
2025
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| _version_ | 1867613293177208832 |
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| access_status_str | Open Access |
| author | Plaatjies, Marvin |
| author2 | de Jager, Phillip |
| author_browse | Plaatjies, Marvin de Jager, Phillip |
| author_facet | de Jager, Phillip Plaatjies, Marvin |
| author_sort | Plaatjies, Marvin |
| collection | Thesis |
| description | In this empirical research, the impact of national debt to GDP (and other selected macroeconomic variables) on the capital structure of South African firms is investigated during a period of heightened economic uncertainty. Economic uncertainty, as defined in this study, refers to the degree of unpredictability and lack of confidence that exist in the economic environment. In the context of South Africa, economic uncertainty is attributed to the year- on-year overall deterioration of key macroeconomic variables (my variables of interest), namely the national debt to GDP, GDP growth rate, inflation rate, interest rates, and tax rate. This research is built on previous research conducted by Pierre Erasmus in 2010, which covered the capital structure, and the debt maturity decision, of South African firms during the period between 1989 to 2008. Erasmus mainly considered the following macroeconomic variables: GDP, inflation rate, growth rate, and exchange rate. I have expanded on the study of Erasmus by incorporating other macroeconomic variables, including national debt to GDP, interest rates, and tax rate. I conducted generalised method of moments (GMM) alongside pooled Ordinary Least Squares (OLS) and performed a series of endogeneity checks using alternative regression models. The findings of this study, which are explained by the pecking order theory, indicate that national debt to GDP, inflation rate and tax rate are important factors that influence the capital structure decisions of South African firms. The study concludes that South African firms tend to exhibit a risk averse nature towards gearing and prefer equity finance over debt financing. Pierre Erasmus also concluded that South African firms adjust their capital structure choices in response to the evolving economy and prefer equity finance over debt finance. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/41901 |
| institution | University of Cape Town (South Africa) |
| language | English eng |
| last_indexed | 2026-06-10T12:33:49.949Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2025 |
| publishDateRange | 2025 |
| publishDateSort | 2025 |
| publisher | Department of Finance and Tax |
| publisherStr | Department of Finance and Tax |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/41901 An empirical study of the impact of macroeconomic variables on the capital structure of South African firms during periods of heightened economic uncertainty Plaatjies, Marvin de Jager, Phillip GDP South Africa Firms In this empirical research, the impact of national debt to GDP (and other selected macroeconomic variables) on the capital structure of South African firms is investigated during a period of heightened economic uncertainty. Economic uncertainty, as defined in this study, refers to the degree of unpredictability and lack of confidence that exist in the economic environment. In the context of South Africa, economic uncertainty is attributed to the year- on-year overall deterioration of key macroeconomic variables (my variables of interest), namely the national debt to GDP, GDP growth rate, inflation rate, interest rates, and tax rate. This research is built on previous research conducted by Pierre Erasmus in 2010, which covered the capital structure, and the debt maturity decision, of South African firms during the period between 1989 to 2008. Erasmus mainly considered the following macroeconomic variables: GDP, inflation rate, growth rate, and exchange rate. I have expanded on the study of Erasmus by incorporating other macroeconomic variables, including national debt to GDP, interest rates, and tax rate. I conducted generalised method of moments (GMM) alongside pooled Ordinary Least Squares (OLS) and performed a series of endogeneity checks using alternative regression models. The findings of this study, which are explained by the pecking order theory, indicate that national debt to GDP, inflation rate and tax rate are important factors that influence the capital structure decisions of South African firms. The study concludes that South African firms tend to exhibit a risk averse nature towards gearing and prefer equity finance over debt financing. Pierre Erasmus also concluded that South African firms adjust their capital structure choices in response to the evolving economy and prefer equity finance over debt finance. 2025-09-19T12:41:56Z 2025-09-19T12:41:56Z 2025 2025-09-19T09:49:48Z Thesis / Dissertation Masters MCom http://hdl.handle.net/11427/41901 en eng application/pdf Department of Finance and Tax Faculty of Commerce University of Cape Town |
| spellingShingle | GDP South Africa Firms Plaatjies, Marvin An empirical study of the impact of macroeconomic variables on the capital structure of South African firms during periods of heightened economic uncertainty |
| thesis_degree_str | Master's |
| title | An empirical study of the impact of macroeconomic variables on the capital structure of South African firms during periods of heightened economic uncertainty |
| title_full | An empirical study of the impact of macroeconomic variables on the capital structure of South African firms during periods of heightened economic uncertainty |
| title_fullStr | An empirical study of the impact of macroeconomic variables on the capital structure of South African firms during periods of heightened economic uncertainty |
| title_full_unstemmed | An empirical study of the impact of macroeconomic variables on the capital structure of South African firms during periods of heightened economic uncertainty |
| title_short | An empirical study of the impact of macroeconomic variables on the capital structure of South African firms during periods of heightened economic uncertainty |
| title_sort | empirical study of the impact of macroeconomic variables on the capital structure of south african firms during periods of heightened economic uncertainty |
| topic | GDP South Africa Firms |
| url | http://hdl.handle.net/11427/41901 |
| work_keys_str_mv | AT plaatjiesmarvin anempiricalstudyoftheimpactofmacroeconomicvariablesonthecapitalstructureofsouthafricanfirmsduringperiodsofheightenedeconomicuncertainty AT plaatjiesmarvin empiricalstudyoftheimpactofmacroeconomicvariablesonthecapitalstructureofsouthafricanfirmsduringperiodsofheightenedeconomicuncertainty |