The corporate uses of debt
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...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
AOSIS
1995-09-01
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| Series: | South African Journal of Business Management |
| Online Access: | https://sajbm.org/index.php/sajbm/article/view/828 |
| Summary: | 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. |
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| ISSN: | 2078-5585 2078-5976 |