Choice of capital structure: a study of Libyan companies a comparison with UK companies

This study provides comparative evidence about how the three dominant capital structure theories pertain to Libyan and UK companies. The Libyan business environment differs from that of the UK in terms of company ownership; regulation and enforcement of law; and in corporate governance. Some of the differences between Libya and the UK are pertinent when comparing corporate capital structure in the the two countries. The stock market in Libya was established only in 2007, so the range of financing options available to companies is more limited than in a country with a well established secondary stock market, which in the UK potentially switches the focus of company financing from short-term investment to long-term investment. The number of determinants of capital structure identified by theoretical reasoning continues to increase, and as a result their analysis has become increasingly complex. The primary contribution of this thesis is to provide some empirical tests of hypotheses suggested by theoretical models and reasoning. In the search for the most important determinants of capital structure, the main objective of this research is to examine empirically the determinants of the capital structure of Libyan and UK firms. [abstract continues...