An analysis of the relationship between asset structure and debt policy for companies listed at the Nairobi Stock Exchange
Abstract
This paper examined the relationship between asset structure and debt policy of listed
companies at the Nairobi stock exchange over the period 1999 to 2003 excluding companies
in the financial sector. Several studies have shown that asset structure is a significant factor
affecting capital structure of companies. Companies needing new finance will issue equity or
debt, depending on prevailing circumstances. The debt policy measures examined were levels
of corporate debt, maturity structure, and private versus public debt and priority structure of
debt. The study considered book value of total assets and market values as well. The study
found a direct relationship between asset structure and both the level of corporate debt, and
private versus public debt when market values and book values of total assets were
considered. A negative relationship exists between asset structure and maturity structure of
corporate debt when b the market values and book values of total assets were considered .
For priority structure of corporate debt the analysis gave an inconclusive answer.
Publisher
University of Nairobi
Subject
Asset StructureRights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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