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Abstract

The purpose of this research is to contribute to the finance literature by providing further evidence on the determinants of capital structure. This research is novel given the fact that not many researches has been done on firms classified as financially distressed. In this research, firm level yearly data of firms listed as financially distressed under the requirement of Practice Notes 4, Amended Practice Notes 17 and Practice Notes 17 were used. The final sample consists of 190 observations. Static panel data analysis techniques were considered in analyzing the data. The results of the regression suggest that firm's changes in investment, investment opportunity, tangible assets, intangible assets and liquid assets is the independent variable found to have a statistically significant relationship with capital structure. The remaining independent variables do not appear to have a statistically significant relationship with capital structure.