CAPITAL STRUCTURE AND PROFITABILITY OF COMMERCIAL STATE-OWNED ENTERPRISES IN NAMIBIA
CAPITAL STRUCTURE AND PROFITABILITY OF COMMERCIAL STATE-OWNED ENTERPRISES IN NAMIBIA

Summary/Abstract: This study investigates the impact of capital structure on the performance of commercial state-owned enterprises (SOEs) in Namibia using panel data modelling techniques on data from 2011 to 2020. The research extends performance measures and leverage measures employed by previous studies, utilizing total liabilities to total assets (TLTA) and total equity to total assets (TETA) to examine the effects of debt structures on corporate finance. The study employs return on equity (ROE) and return on assets (ROA) as performance measures. The findings reveal no significant relationship between capital structure and profitability of commercial SOEs in Namibia, thus supporting the irrelevance theory. Additionally, a unidirectional causality is found between capital structure and profitability measures. The study's implications suggest that high debt levels should be reduced to optimize capital structure and that policies should be implemented to enhance SOE performance through innovation and best practices. The findings contribute to the ongoing debate on public sector reforms and provide a basis for further research in this area.

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