The Impact Of Managerial Self-interest On Corporate Capital Structure (a Case Of Selected Companies In Addis Ababa Ethiopia)

The literature on the impact of managerial self-interest on capital structure has alreadyrnbeen developed in developed markets that have different institutional financingrnarrangements from those in emerging markets. Therefore this requires a thoroughrnexamination of the impact of managerial self-interest on corporate capital structure inrndeveloping market. In addition, the study so far has been conducted on listed firms withrndifferent proxies of managerial self-interest as indicators of capital structure.rnThis thesis deals with the impact of managerial self-interest on corporate capitalrnstructure of eight selected companies in Addis Ababa. The study has examined the impactrnof managerial self-interest on corporate capital structure using both qualitative andrnquantitative methods of inquiry. Mainly the study focuses on the questionnaires analysisrnso as to see the representative proxies of managerial self-interest such as, boardrnindependence, managerial shareholding and institutional shareholding, on firms‟ capitalrnstructure decision. In addition, performance, risk, company size and tangibility of assetsrnwere regressed using ordinary least square (OLS) as a supportive variable in order torncompromise the possible deficiencies that might appear in questionnaire analysis. In itsrnmain finding the result shows the inverse relationship between managerial shareholdingrnand capital structure in case of banks and manufacturing companies, and relativelyrnpositive relationship in case of insurance companies under consideration. This is possiblyrnbecause of the presence of principal shareholders and management‟s attitude towardsrnmaximizing the company‟s profit and obtaining tax benefits for employing long term debt

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