Brahim Bouayad & Salah Eddine Kartobi (2018)
Athens Journal of Mediterranean Studies, 4(4), p. 305-320
Abstract. The aim of our paper is to try to determine financial structure of firms using a financing convention theory. Our research focused on a panel of listed 50 non-financial firms of Casablanca Stock Exchange. We apply a principal components analysis to identify more appropriate factors that determine funding regimes choice. We then use hierarchical cluster analysis to classify these listed non-financial firms by cluster. Our results show that financial structure is influenced by the nature of needs for funding. We find three separate funding regimes over the period 2003-2010: (i) autonomy regime, (ii) debt regime and (iii) overdraft regime. On the basis of these findings, the study concludes that the first perform reasonably well in predicting financial performance. The second in predicting investment while the third, in predicting the importance of financing need of transactions.
Keywords: Firm’s financial structure, Funding regimes, Moroccan non-financial firms, Pecking Order and Market Timing Theories, Tradeoff.