IMPACT OF NON-FINANCIAL FIRMS CAPITAL STRUCTURE ON FIRM-VALUE PERFORMANCE IN DEVELOPING AFRICA

The debate on capital structure issues is never ending. The major point of this article is to explore whether capital structure increases firm-value performance of African nonfinancial firms. The study utilized two step System Generalized Method of Moments to analyze panel data of 406 firms from eight African nations for the period 2010-2018. The study finds evidence that capital structure increases firm-value performance of firms in the eight African nations. The results suggest that firms in Africa prefer debt financing in their capital structure to reap the benefit of interest tax shield which increases firm-value performance. Moreover, shareholders should encourage firmmanagers to capitalize on the tax-shield gains of debt to increase the value of their investments.