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A financial analyst seeks to examine the effect of capital
structure on debt financing in selected listed companies. Five
companies were selected and followed for 10-year period.
Information derived from the selected companies’ financial
statements were used to calculate the Debt to Equity (DER),
Long-Term Debt to Equity (LDR), Short-Term Debt to Equity
(SDR), and Total Debt to Total Equity (TDTE). The dependent
variable which is debt financing uses TDTE as a proxy variable.
Three competing models were fitted to the dataset and the
output is presented in Table 1.
Table 1: Estimates and Diagnostic information on Competing
Models

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