Evidence on the determinants of capital structure of non-financial corporates in Mauritius

This paper utilises the most comprehensive database on non-financial listed companies in Mauritius, to empirically study the determinants of capital structure of these firms. A model, which predicts the main determinants of leverage, is tested on a sample of 24 firms using the panel procedure over the period 1992-2000. The findings from the random effects specification appear to support the pecking order theory and to reject the trade off theory of capital structure. Further, the small role played by the Mauritian capital market as a source of long-term finance is evident from the results with respect to a number of the explanatory variables including age, growth, risk, and profitability. The strong and positive results for the size variable are consistent with the findings of other studies and with the trade off theory, but are at odds with the general findings of this study. [Article copies available for a fee from The Haworth Document Delivery Service: 1-800-HAWORTH. Email address: <docdeliveryηaworthpress.com> Website: <http://www.HaworthPress.com>