Corporate Tax Rates, Financial Leverage, and Firm Growth in Sub - Saharan Africa
The study investigates the moderating effect of corporate tax rates on the relationship between financial leverage and firm growth in sub-Saharan Africa. Firm and country-level data of 327 non-finance firms in sub-Saharan Africa are obtained from the Bloomberg terminal and the Global Competitive In...
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| Format: | Article |
| Language: | English |
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Danubius University
2023-03-01
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| Series: | Acta Universitatis Danubius: Oeconomica |
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| Online Access: | https://dj.univ-danubius.ro/index.php/AUDOE/article/view/2143 |
| _version_ | 1811159983454158848 |
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| author | Emmanuel Okofo-Dartey |
| author_facet | Emmanuel Okofo-Dartey |
| author_sort | Emmanuel Okofo-Dartey |
| collection | DOAJ |
| description |
The study investigates the moderating effect of corporate tax rates on the relationship between financial leverage and firm growth in sub-Saharan Africa. Firm and country-level data of 327 non-finance firms in sub-Saharan Africa are obtained from the Bloomberg terminal and the Global Competitive Index of the World Economic Forum (WEF) from 2007 to 2017 for the study. The difference Generalized Moment of Method (GMM) approach was used for the analysis. Results of the study reveal a positive and statistically significant relationship between financial leverage and profitability. Financial leverage is negatively and statistically significantly related to firms' growth opportunities in SSA. However, the study finds that, in the presence of corporate tax rates, financial leverage relates to the growth of firms in SSA positively. Per the observed influence of corporate tax in the measured relationship between financial leverage and firm growth, governments in sub-Saharan Africa should implement tax policies that do not adversely affect firm expansion but rather motivate foreign investors and encourage local companies to grow.
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| first_indexed | 2024-04-10T05:51:04Z |
| format | Article |
| id | doaj.art-aee1c75d51054eb4bea87faa87e3ffe5 |
| institution | Directory Open Access Journal |
| issn | 2065-0175 2067-340X |
| language | English |
| last_indexed | 2024-04-10T05:51:04Z |
| publishDate | 2023-03-01 |
| publisher | Danubius University |
| record_format | Article |
| series | Acta Universitatis Danubius: Oeconomica |
| spelling | doaj.art-aee1c75d51054eb4bea87faa87e3ffe52023-03-05T02:23:54ZengDanubius UniversityActa Universitatis Danubius: Oeconomica2065-01752067-340X2023-03-01191Corporate Tax Rates, Financial Leverage, and Firm Growth in Sub - Saharan Africa Emmanuel Okofo-Dartey0University of South Africa, department of financial intelligence The study investigates the moderating effect of corporate tax rates on the relationship between financial leverage and firm growth in sub-Saharan Africa. Firm and country-level data of 327 non-finance firms in sub-Saharan Africa are obtained from the Bloomberg terminal and the Global Competitive Index of the World Economic Forum (WEF) from 2007 to 2017 for the study. The difference Generalized Moment of Method (GMM) approach was used for the analysis. Results of the study reveal a positive and statistically significant relationship between financial leverage and profitability. Financial leverage is negatively and statistically significantly related to firms' growth opportunities in SSA. However, the study finds that, in the presence of corporate tax rates, financial leverage relates to the growth of firms in SSA positively. Per the observed influence of corporate tax in the measured relationship between financial leverage and firm growth, governments in sub-Saharan Africa should implement tax policies that do not adversely affect firm expansion but rather motivate foreign investors and encourage local companies to grow. https://dj.univ-danubius.ro/index.php/AUDOE/article/view/2143Profitability; Growth opportunities; Firm growth, financial leverage, Corporate tax rate |
| spellingShingle | Emmanuel Okofo-Dartey Corporate Tax Rates, Financial Leverage, and Firm Growth in Sub - Saharan Africa Acta Universitatis Danubius: Oeconomica Profitability; Growth opportunities; Firm growth, financial leverage, Corporate tax rate |
| title | Corporate Tax Rates, Financial Leverage, and Firm Growth in Sub - Saharan Africa |
| title_full | Corporate Tax Rates, Financial Leverage, and Firm Growth in Sub - Saharan Africa |
| title_fullStr | Corporate Tax Rates, Financial Leverage, and Firm Growth in Sub - Saharan Africa |
| title_full_unstemmed | Corporate Tax Rates, Financial Leverage, and Firm Growth in Sub - Saharan Africa |
| title_short | Corporate Tax Rates, Financial Leverage, and Firm Growth in Sub - Saharan Africa |
| title_sort | corporate tax rates financial leverage and firm growth in sub saharan africa |
| topic | Profitability; Growth opportunities; Firm growth, financial leverage, Corporate tax rate |
| url | https://dj.univ-danubius.ro/index.php/AUDOE/article/view/2143 |
| work_keys_str_mv | AT emmanuelokofodartey corporatetaxratesfinancialleverageandfirmgrowthinsubsaharanafrica |