Orientation Coronavirus disease 2019 (COVID-19) and the subsequent lockdown regulations restricted ongoing trade for most retail firms. Business strategies had to be adjusted to avoid a grand ...challenge of insolvency.Research purpose This paper provides previously unavailable empirical evidence of firm-level capital structure and determinants in relation to the COVID-19 pandemic for the firms in the retail sector in an emerging market.Motivation for the study Capital structure decisions, as influenced by the pandemic, provide novel value because such decisions are usually long-term, yet the volatile uncertainty of the pandemic negated the long-term cycle.Research design, approach and method A correlational design was followed to identify and interpret how retail firms reacted during the initial lockdown period. This was completed using a quantitative method, doing statistical analysis to describe and interpret possible relationships. The secondary data ranged from 2009 to 2021 for 11 South African listed retail firms was collected from EquityRT® and INET BFA. Data were analysed using descriptive statistics and panel data analysis by Eviews 12 software.Main findings The pandemic, measured using a dummy variable, was found to have a significant effect on capital structure together with risk, profitability, size and age. Liquidity, tangibility and growth were insignificant. Overall, capital structure proxied by the debt-equity ratio was reduced timeously without exhibiting dependence on short-term funds.Practical/managerial implications The retail firms exhibited exemplary capital structure decision-making behaviour during the COVID-19 pandemic.Contribution/value-add The empirical evidence of the effect of the COVID-19 pandemic on the capital structures and its determinants of retail firms in South Africa is the contribution of this study. Based on the findings, two conflicting capital structure theories (pecking order and trade-off theories) were part of the decision-making process, creating the cautious behaviour for these retail firms.
The retailing industry of South Africa is one of the biggest in the African continent. The study examined the determinants of capital structure for listed retailing firms on the Johannesburg ...Securities Exchange, the 16th largest Securities Exchange in the world and an emblematic of emerging economies. Quantitative data was collected across 17 retailing firms from 2009-2018. Results from panel regression analysis supported both trade-off and pecking order theories while indicating that firm size, firm age, profitability, growth opportunities and tangibility are the significant determinants of capital structure for listed retailing firms. Liquidity was found to be insignificant.
Share prices and dividends were considered as important factors in creating and increasing shareholders’ wealth. In some theories it was indicated that the existence of a relationship between share ...prices and dividends could be questioned. More important for companies and investors was the determination of a relationship between share price volatility and dividends. If such a relationship existed, companies could structure their dividend policy decisions to attain minimum share price volatility in order to attract maximum investor interest. This was especially important to small and medium-sized companies finding themselves in the early growth phase. The aim of this study was to determine whether a relationship existed between share price volatility and dividend policy for companies listed on the Alternative Exchange (AltX) on the Johannesburg Stock Exchange Limited (JSE Ltd). Dividend policy was measured through dividend yield and the dividend pay-out ratio. Share price volatility was regressed against dividend yield and the dividend pay-out ratio using panel data regression analysis to achieve this aim. Share price volatility was found to have a statistically significant and negative relationship with dividend yield, and a statistically insignificant relationship with the dividend pay-out ratio. The results indicated that a company could possibly reduce the share price volatility by using the dividend policy by declaring dividends, although the amount of dividends in relation to earnings were of little importance to investors of small to medium-sized companies. The results of this study therefore provided information that such companies could use to structure their dividend policy in such a way that share price volatility risk would be minimised, which in turn would promote optimum growth for investors.
