Understanding capital structure dynamics and existence of optimal capitals structure


“I would recommend the MSM DBA program for those seeking to advance their research skills in a high standard educational climate. The DBA program at MSM offers an amazing academic experience. The program design is perfect in terms of duration, milestones, and content.” This said Mr. Ramy William Hanna after successfully defending his DBA thesis at MSM titled: Understanding Capital Structure Dynamics and Existence of Optimal Capital Structure: An Empirical Study on Egyptian Non-Financial Firms.

Mr. Hanna’s research is designed to provide a better understanding of capital structure dynamics and the effect of leverage decisions on firm value of Egyptian non-financial firms. This in the light of the effects of the political uncertainty and the 2008 global financial crisis.

His research outcomes indicate that the effect of leverage on firm value is linear and negative. This concludes that optimal leverage doesn’t exist. Analysis of capital structure dynamics revealed that there is a target leverage ratio that is determined by political uncertainty and a set of firm-specific determinants. Results further indicate that Egyptian non-financial firms adjust towards that target at a rapid speed that is determined by a set of firm-specific factors.

Being consistent with the pecking order, market timing, and inertia theories, conclusions hold practical implications that shape a set of recommendations related to the proper selection of the source of finance as well as the right timing.

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