Resumen de Dynamism, caputal structure and performance in a Sub-Saharan economy: : Extending the institutional difference hypothesis
Joseph Ofori-Dankwa, Scott D. Julian
Extant research examining the capital structure�performance relationship has been undertaken primarily in developed economies. These studies integrate agency theory considerations with the contingency perspective and suggest a positive interaction between sector dynamism, equity, and performance. Our study extends this research stream by examining the capital structure�performance link in a sub-Saharan economy, an underresearched but economically emerging region. Using logic undergirding a substantial stream of institutional theory-based studies that we term the institutional difference hypothesis, we argue that the implications of the capital structure�performance relationship are contingent on the extent of national-level institutional underdevelopment. Taking into account institutional differences between developed economies and those in the sub-Saharan region, we hypothesize a negative interaction between sector dynamism, equity, and firm performance in sub-Sahara. Using longitudinal data from Ghanaian corporations for 1996�1999, we find substantial support for our hypothesis. Contrary to findings from developed economies, sector dynamism negatively moderates the firm equity�performance relationship: a strongly positive effect of equity on performance in stable sectors becomes slightly negative in highly dynamic ones. We unpack the implications of these results for theory and research.
