Stock market development and financing decisions of listed firms ...

African Journal of Business Management Vol.2 (x), pp. 209-216, November 2008
Available online at http://www.academicjournals.org/AJBM
ISSN 1993-8233 © 2008 Academic Journals




Ful Length Research Paper
Stock market development and financing decisions of
listed firms in Ghana

Godfred A. Bokpin1* and Zangina Isshaq2

1Department of Finance, University of Ghana Business School, Ghana.
2Ghana Institute of Management and Public Administration, Ghana.

Accepted 17 November 2008

The study examines the impact of stock market development on the financing choices of listed firms in
Ghana using data covering the period 1991 to 2005. We regressed debt-equity ratios on market size and
market liquidity variables using ARIMA models. Our results suggest that stock market development has
not led to the substitution of equity for debt as per propositions by Demiguc-Kunt and Maksimovic
(1996). Further, our results suggest market liquidity variables show mixed impact on the debt-equity
proportions suggesting that the size of the Ghanaian stock market is not yet significant to impact on
financing choices of firms on the exchange. Short-term debt was found to be significantly negatively
related to the market size variable and turnover ratio (a measure of market liquidity), but insignificantly
positively related to the other measure of market liquidity. Further, research on the openness of the
macro-economy, and the entire financial market spectrum’s development could put these results in a
proper context.

Key words: Stock market, choice of financing, Ghana.


INTRODUCTION

The financing choice of firms is perhaps the most
lances various costs and benefits of debt and equity
researched topic area in finance in the past decades
(Modigliani and Mil er, 1963; Mayers, 1990; Hovakimian
fol owing the seminal article of Modigliani and Mil er
et al., 2004). The pecking order theory on the other hand
(1958) which raised the issue of the relationship between
conceives the capital choice decision as one of making a
a firm’s choice of finance and its value. Today there are
scale of preference. The first source is internal y
stil increasing research and new evidence being sought
generated funds, then debt and then equity depending on
for the relevance or otherwise of the theory started by
the funds requirements and other factors (Myers and
Modigliani and Mil er. The theorem hinges on the princi-
Majluf, 1984).
ple of perfect capital markets. Empiricists have found va-
The Ghanaian stock market has been around for close
rious evidences for some level of imperfection in capital
to two decades. The creation of the Ghana Stock Ex-
markets in the real world.
change was part of the recommendations of the econo-
Even though there is no universal y accepted theory
mic reforms carried out in the 1980s to generate sustain-
explaining the debt-equity choice, there are several
able economic growth and development. As Boateng
theories that have emerged in the last couple of decades
(2004) observes, after many years of experiment with
explaining firms’ capital structure. Among these theories
heavy state intervention in the economy, a consensus
include the pecking order theory, the free cash flow
emerged that the achievement of a more dynamic econo-
theory, the capital signaling theory and the trade-off
mic growth required a greater role for the private sector
theory. The trade-off theory of corporate financing is built
and stock markets are good levers for boosting private
around the concept of target capital structure that ba-
sector access to finance. The dynamism of an economy

can be boosted by developments in the financial market

as the principal intermediation function provided by finan-

cial market participants has significance for lubricating
*Corresponding author. E-mail: gabokpin@ug.edu.gh or
the pace of economic activity in the economy. Financial
godfredbokpin@yahoo.com
markets also play a crucial role of distributing resources

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210 Afr. J. Bus. Manage.







and directing it towards the sectors of the economy that
2005). The study of Genenc (2003) provides empirical
need it. This process talks about the al ocative efficiency
evidence that stock market activities along with firm cha-
of financial markets.
racteristics and other variables determine the capital
A number of studies have considered the impact of
structure of Turkish firms.
financial market development on economic growth. There
Further, Booth et al. (2001) in their study, note that
is evidence of a positive impact of financial market deve-
although some of the insights of modern finance theory
lopment on the economic performance of an economy as
are applicable across countries, much remains to be
provided by Levine (1997). Shahbaz et al. (2008) using
done to understand the impact of different institutional
ARDL found a strong relationship between stock market
features on capital structure. This question, however, had
development, for one, and economic growth both in the
been answered in an earlier observation. Mayer (1990)
long-run and the short-run. The authors, indeed, observe
noted that financial decisions in developing countries are
that the relationship is bi-directional in the long-run but
somehow different even though he did not indicate the
uni-directional (from stock market to economic growth) in
effect of institutional variables in causing the difference.
the short-run. Earlier in King and Levine (1993), the
In terms of financing choice behaviour Demiguc-Kunt and
authors found that financial intermediaries can improve
Maksimovic (1999) showed that developing countries
the al ocative efficiency of investment due to their
have substantial y lower amounts of long-term debt; but
capacity to effectively acquire and process information
whether this is a result of institutional factors or not is not
about the innovative activities of business people. The
directly stated in the study. In Ghana, Aboagye (1996) in
most widely used measure of financial development
a study on corporate debt levels did not find any correla-
pertains to the level of financial intermediation, which
tion between debt ratios and return on equity for public
measures the effect of financing institutions such as
companies, which gives an indication that Demiguc-Kunt
banks. Agarwal and Mohtadi (2004) find evidence in
and Maksimovic’s (1999) observation is not far fetched.
support of the fact that banking increases the use of
In terms of cross-country capital structure differences,
leverage in developing countries. The developments in
Ramamurti and Vernon (1991) found significant varia-
financial markets of most developing countries had
tions in capital structures among emerging market econo-
financial liberalization as a precursor. Countries such as
my firms to suggest not only that financing choice is
Ghana, Zimbabwe and a number of sub-Saharan African
different between developed and developing countries,
countries have experimented with financial liberalization
but also that it varies within the developing countries.
and this has brought about significant developments in
These factors suggest that different economic environ-
their financial systems. The Zimbabwean example has
ments and institutional factors have influence on the
been found to have opened up the capital markets and
choice or mix of debt and equity for firms. Therefore,
improved transparency of firm financing behaviour
differ-rence in capital market developments, influences
(Mutenheri and Green, 2003).
the choice of financing by firms. A number of studies
In developed financial markets, and increasingly in
have investigated the capital structure choice in Ghana
developing financial markets, stock markets are taking
(Abor and Biekpe, 2004; Boateng, 2004) among others.
center stage in financial markets. It has been argued that
Whilst Abor and Biekpe looked at the capital structure of
stock markets stimulate investments because as orga-
listed firms, Boateng investigated the capital structures of
nized markets, they recognize and fund productive pro-
international joint ventures in Ghana. An investigation of
jects that lead to economic growth and ensure proficient
the role of debt in the balance sheets of Ghanaian firms
al ocation of capital (Caporale et al., 2004). A study
was conducted by Aboagye (1996). Aboagye’s study con-
conducted by Mutenheri and Green (2003) on the
centrated on public firms and therefore included firms
Zimbabwean economy showed that the difference
listed on the Ghana Stock Exchange.
between pre-reform and post-reform era in the country’s
These studies have al sought to find the characteristics
financial systems suggest that the reform achieved partial
that influence capital structure choice and the role of debt
success in opening up the capital market and improving
finance and its relationship with other balance sheet
the transparency of firm financing behaviour.
variables such as profitability in Ghanaian firms. These
A theoretical explanation of stock market development
studies did not, however, consider the role of the deve-
influencing the choice of finance by firms can be found in
lopment of the stock market on the financing choice of
the arguments of Booth et al (2001) that as equity mar-
listed firms in the country. It is against this background
kets become more developed they would become a
that this current study is being conducted using Ghana as
viable option for corporate financing. This would be the
a case study. The study specifical y sought to document
case because in developing countries the banking sector
the impact of stock market development on the financing
is the main source of debt and which is far developed
choices of firms listed on the Ghana Stock Exchange.
than the stock markets in these countries. Organized
The rest of the paper is organized as fol ows; section two
exchanges would influence the process, also, because
examines literature on the impact of stock market deve-
they provide liquidity for financial assets, and by making
lopment on financing decisions of firms, section three
risk diversification possible (Shahbaz et al., 2008; Osei,
considers the methodology used in the study.

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Bopkin and Isshaq 211






Section four discusses the results and presents the
nental-German-Japanese model (Booth et al., 2001). In
conclusions of the study.
the former, the connection between financial institutions

and business are unlike the latter where banks and

Literature review
corporations are tightly linked resulting in differences in

the capital market’s influence on borrowing behaviour.
The Modigliani-Mil er theorem’s central assumption is
The Ghanaian stock market is based on the Anglo-Saxon
perfect capital markets hypothesis but the reality of life is
model.
that capital markets are not always perfect. This leads to
So, with respect to capital market development,
the idea that the contexts in which market participants
Subrahmanyam and Titman (1999) proffer another
operate have implications for financing decisions. In
theoretical argument of how stock market development
effect, not only do firm level characteristics noted above
impacts financing choices of firms. The authors argue
have implications for the capital structure of the firm, but
that when the stock market consists of a relatively smal er
also the developments of capital markets. Demiguc-Kunt
number of firms, the information conveyed by the public
and Maksimovic (1996) has four arguments as to the
is less accurate, discouraging firms from taking advan-
consequences of stock market development for financing
tage of public financing but as the stock market improves,
choice of firms: 1.) stock market development leads to
and information quality improves, it increases the incen-
substitution of outside equity, through public offerings or
tives for firms to go public. The evidence available of
stock exchange listing, for debt. The effect would be a
financial market development influence on choices of
decline in the debt-equity ratio hence stock market deve-
capital suggest financial liberalization has a negative
lopment has a negative effect for debt use. 2.) Closely
influence on debt-to-equity ratios (Schmukler and
held firms (family owned firms for example) would do
Vesperoni, 2001) which supports an earlier conclusion by
public offering to substitute inside equity for outside
Demiguc-Kunt and Maksimovic (1996) that there was a
equity; thus, there would be no change in the debt-equity
negative correlation between long-term debt of firms in
ratio. Therefore stock market development would have no
developing countries. The authors are also of the opinion
effect on debt-equity ratio, 3.) stock market development
that financial liberalization leads to shifts in maturity from
would create opportunities for new diversification ability
long-term debt to short-term debt. The evidence thus
which would be used by firms to expand, through debt or
explains the flight to short-term bank financing noted in
equity issue. The direction of effect of stock market devel-
Mutenheri and Green (2003) in their study of listed
opment on leverage would then depend on the financing
companies in Zimbabwe. Mutenheri and Green (2003)
choice made; and. 4) stock market development would
provide evidence that in Zimbabwe firms relied heavily on
lead to the flow of information, which would improve
external finance especial y short-term bank financing
corporate governance and also lower cost of raising capi-
after the reforms of the country’s financial system.
tal – debt or equity – leaving open the question of whe-
Another evidence is provided by Subrahmanyam and
ther debt-equity ratio would be impacted negatively or
Titman (1999) who observed that the smal er the number
positively by stock market development.
of firms on the stock market the less accurate the
In the study of Booth et al. (2001) they concluded that
information conveyed by stock market to the public which
capital structure in developing countries are affected by
discourages private firms from going public but as the
the same variables as in developed countries but remark
stock market improves, the information conveyed
that the country differences they observed was attribu-
improves, and private firms are encouraged to go public.
table to differences in institutional features. The organi-
This observation in conjunction with the findings of
zation of financial markets is the institutional features
Demiguc-Kunt and Maksimovic (1996) and Agarwal and
mentioned here, as developing countries have less deve-
Mohtadi (2004) leads to the expectations that as the
loped trading systems on their stock exchanges com-
stock market develops, firms would prefer equity
pared with what pertains in more developed financial
financing to debt financing.
markets. In this regard, Demiguc-Kunt and Maksimovic
The indicators of the stock market development or
(1996) noted that country characteristics such as effi-
performance are market capitalization, volume of shares
ciency of legal institutions and the development of capital
traded, and the turnover ratio (Agarwal and Mohtadi,
markets are important in explaining differences in firms’
2004; Demiguc-Kunt and Maksimovic, 1996). In studies
capital structures. This is corroborated by Genenc (2003)
into market liquidity and asset prices, turnover ratio is a
who found that in the Turkish economy institutions,
measure of market liquidity (Keene and Pederson, 2007;
governmental actions, and stock market activities deter-
Naes and Odegaard, 2008). Volume of shares traded is
mine capital structures.
important because as Booth et al. (2001), noted, if a large
Other institutional features including the nature of the
amount of equity is not traded it can be inhibiting to
relationship between the financial institutions and busi-
corporate financing as a smal amount is traded. The
ness that need finance affect the financing decisions of
authors are also of the opinion that volume of transact-
firms. The literature has two strands of these features:
tions is equal y as important as market capitalization. The
the Anglo-Saxon capital markets model and the Conti-
volume of shares traded also indicates liquidity on the

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212 Afr. J. Bus. Manage.







stock market (Demiguc-Kunt and Maksimovic’s measure-
LTDE = α + β * MCAP
*
4
+ β STRD
5
+ β TR
6
+ ε
ment of stock market development). At the same, this
t
t
t
t
t
t
variable also measures transaction cost on the exchange.
…………………………… (2)
As an exchange develops and achieves greater effi-

ciency, this should fol ow leading to more investors turn
debt by Demiguc-Kunt and Maksimovic (1996). The
to the market, and more corporations being attracted to
second equation would test for the long-term debt part of
list.
capital structure decision in line with the findings of
The argument tested in this study from the arguments of

Demiguc-Kunt and Maksimovic (1996) is that, as stock

markets develop, firms would substitute outside equity

through public offerings for debt hence a negative
Where:
relationship. The other arguments are borne in mind but
LTDE = long-term debt to equity at time t
not taken because the firms on the Ghanaian stock
STDE = short-term debt to equity at time t
market do not issue debt instruments of their own.
MCAP = market capitalization/GDP at time t
Furthermore, the other arguments are not considered
STRD = market value of shares traded/GDP at time t
because of Demiguc-Kunt and Maksimovic’s (1996)
TR = turnover ratio at time t
empirical evidence that if stock market liquidity qua-
= constant in each equation stated above
druples, debt-equity ratios decrease by 25%, which sug-
= error term
gests that there could be debt substitution for equity as

stock markets develop.


Data and variables


Model
Whilst the studies of Agarwal and Mohtadi (2004) looked

at both the banking sector and the equity market, this
Demiguc-Kunt and Maksimovic (1999) provide a number
study concentrates on only the development of the equity
of metrics for measuring the development of stock
market and its influence on the choice of financing of
markets. Variable measurements relating to stock market
listed firms. The banking sector has been the mainstay of
development fol ows their metrics. Agarwal and Mohtadi
sources of finance for Ghanaian firms prior to the arrival
(2004) model the relationship between financial market
of the stock exchange. The GDP data used are nominal
development and capital structure decisions as fol ows:
values instead of real GDP because market capitalization

and value of shares traded are al reported in nominal
Model 1: D = β * X + δ + γ + ε
values.
it
it
i
t
it
In a large part, the measurement of leverage variables
Model 2: D = αD −1 + β * X + δ + γ + ε
it
it
it
i
t
it
fol ows that of Agarwal and Mohtadi (2004). Both long-

term debt to equity and short-term debt to equity are
Where subscripts i and t, represent the firm and time
measured as liabilities over shareholders fund (equity) –
respectively, and , , and represent the firm specific
an aggregation of these values for al firms on the market
effects, time specific effects and the stochastic term in
is used. Debt and equity are both book values rather than
the equation. D in both models refers to the debt-equity
market values because the firms on the exchange have
ratio, and X is a vector variable including stock market
not been issuing debt instruments except one firm – HFC
development indicator in model 1 and with banking sector
Bank (a financial institution). Even though the market
variables in model 2. The lagged D in model 2 is
value of equity could be determined it is not used
supposed to measure the hypothesis that firms aim for a
because the comparison of book value of debt to market
target level of capital structure. Al these models used
value of equity is not theoretical y sound.
only long-term debt as the main basis of measuring the
Turnover ratio is defined as the total value of shares
leverage use over the period of development of the stock
traded divided by the market value of shares listed on the
market. From the foregoing the models below are
exchange. This is a proxy for transaction cost on the
derived. The first equation is to test the effect that as the
exchange (Agarwal and Mohtadi, 2004) and compliments
market develops, firms rely on short-term financing
total values of shares traded as a ratio of GDP. It also
(Mutenheri and Green, 2003) and the negative correlation
measures the liquidity of the market. The lower the tran-
found between stock market development and short-term
saction cost the more preferable the stock market would
Agarwal and Mohtadi (2004), Demiguc-Kunt and
become in raising funds. Market capitalization as a ratio
Maksimovic (1996, 1999) and Schmukler and Vesperoni
of GDP seeks to measure the market size and it assumes
(2001).
that the market size measures the market’s ability to

mobilize capital hence the negative relationship with debt
STDE = α + β * MCAP
*
finance.
1
+ β STRD
2
+ β TR
3
+ ε
t
t
t
t
t
t
Time series data was used for this study. The Ghana
……………………….. (1)
Stock Exchange Fact-book for the period 1991 to 2005

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Bopkin and Isshaq 213



Table 1. Descriptive Summary Statistics.


Obs
Mean
Std Dev
Min
Max
MCAP
15
0.2895
0.3497
0.0115
1.2411
STRD 15
0.0044
0.0039
0.000
0.0141
TR
15
0.0208
0.0158
0.0035
0.0519
STDE
15
41.4279
88.2127
0.7289
311.2011
LTDE
15
0.2895
0.3497
0.0115
1.2411



was used, coupled with GDP data from the State of the
are reported on the results obtained from ARIMA
Ghanaian Economy published by the Institute of Statis-
estimation.
tical, Social and Economic Research, ISSER annual y.

The variables provided in the annual statements of com-

panies for each year was extracted for the various years
ANALYSIS OF RESULTS
for the purpose of this study from the GSE Fact-book,

The appendix provides the results of unit root tests, and
which was easier and more reliable than col ecting the
correlation matrix between the variables. Table 1 here
data directly from the financial statements of each com-
presents the summary statistics of data used in the study.
pany. The accounting data used in this study were
MCAP is a measure of market size, STRD measures
extracted from the figures reported and published in the
liquidity on the stock market, and TR is a measure of a
Ghana Stock Exchange Fact-book for the various years.
proxy for transaction cost. STDE is a measure of short
Data on the macroeconomic variables were extracted
term debt to equity and LTDE is a measure of long term
from various editions of the State of the Ghanaian
debt to equity, al measures are in terms of book values
Economy published by the Institute of Statistical, Social
of debt and equity.
and Economic Research, ISSER.
Table 1 reports the mean and standard deviation of al

the variables over the sample period. It also reports the

minimum and maximum score of both the dependent and
Robustness checks
the independent variables. The mean score for market

To ensure that regression results were not spurious, non-
capitalization to GDP is 0.2895 with minimum and maxi-
stationarity was tested for. Series stationarity is essential
mum values of 0.0115 and 1.2411 respectively. The stan-
to avoid spurious correlation. The Dickey-Ful er Gene-
dard deviation of 0.3497 accounted for the variation
ralized Least Squares approach of El iot, Rothenberg,
between the minimum and maximum values noted ear-
and Stock (1996) unit root test was conducted to deter-
lier. Market value of shares traded to GDP registers an
mine the presence of unit roots in al the series of the
average score of 0.0044 with little variation as shown by
study. The presence of unit roots indicates that the series
the standard deviation of 0.0039 and a minimum and
is integrated; that is, the moments of the stochastic
maximum score of 0.0000 and 0.0141 respectively. Turn-
process depend on time. The test for unit root is thus
over ratio has a mean value of 0.0208 with a standard
essential because ordinary least squares regression
deviation of 0.0158. It also registers a minimum value of
relies on the series being stationary – absence of unit
0.0035 and 0.051 for the maximum value. Short term
roots. Using time series data, this was an important test
debt to equity on the average is 41.4279. It registers the
to ensure that robust results were obtained. The nul
largest variation over the period with a standard deviation
hypothesis of the Dickey-Ful er test is that there is a unit
of 88.2127. Long term debt to equity also registers a
root, otherwise there is no unit root or the series is
mean score of 0.2895 with a minimum and maximum
stationary. The test results are presented in Table 2 in
score of 0.0115 and 1.2411 respectively. There is also
the appendix. The results show that there were unit roots
variation in this variable as evidenced by the standard
in TR, and STRD. The series had therefore to be differ-
deviation of 0.3497.
renced as differencing eliminates unit roots.


Having established that there was unit root in the TR
Long term debt
and STRD series, both the STDE and LTDE equations

were estimated using a first order difference of these
The results obtained for the long-term debt to equity and
series. The Breusch-Godfrey LM Test indicated that there
short term debt to equity as presented in Table 2.The above
was serial autocorrelation in the regression after the
results show that market capitalization even though showing a
transformation. Given this result, an ARIMA with first
negative coefficient as predicted, the coefficient was not
order auto-regression and two year moving average com-
significant. Total share traded, however, shows a nega-
ponent to achieve covariance stationarity and avoid auto-
tive and statistical y significant coefficient and thus sup-
correlation effects. Results reported for the both models

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214 Afr. J. Bus. Manage.



Table 2. White Heteroskedasticity-Consistent Standard Errors and Covariance Results.


Long term debt to equity
Short term debt to equity
MCAP
-0.0441 (-0.9871)
-2.7658 (-2.2135)***
D(STRD)
-4.0902 (-4.4239)**
15.9821 (0.7920)
D(TR)
0.6905 (2.7753)***
-17.8011 (-2.5658)**
AR(1)
1.0214 (102.3148)
1.0264 (68.0169)
MA(2)
-0.9731 (-28.9649)
-0.9799 (-3132.649)
R-squared
0.8644
0.8496
Adjusted R-squared
0.7965
0.7744
S.E. of regression
0.0152
0.4613
Sum squared resid
0.0018
1.7023
Log likelihood
39.1670
-5.2319
Durbin-Watson stat
1.9829
1.7289
Inverted AR roots
1.02
1.03
Inverted MA Roots
0.99
0.99

Notes: Al regressions include a constant. T-statistics are in parentheses. *** ** * means significant
at 10, 5 and 1% level of significance respectively.



supports the hypothesis that there is negative correlation
results show that the market capitalization to GDP ratio
between stock market trading volume and the choice of
has an insignificant relationship to debt-equity ratio. Cast-
debt over equity. Turnover ratio also shows a significant
ing this result in the frame of the first argument for stock
coefficient but rather it has a positive coefficient not a
market development implications for equity choice
negative coefficient as expected. The F-Statistic p-value
proffered by Demiguc-Kunt and Maksimovic (1996), that
as reported above shows that the model is significant and
stock market development leads to substitution of outside
the Durbin-Watson statistic confirms the absence of serial
equity, through public offerings or stock exchange listing
correlation in the transformed series. The R-squared and
for debt, it suggests that this has not been the case in the
the adjusted R-square are equal y high to show a signifi-
Ghanaian stock market over the period studied. Owner-
cant explanatory power of the equation.
ship structure, even though not directly studied in this

instance, may be at play.

However, this could also be symptoms of the develop-
Short term debt
ment stage of the market given the period of over which

The result obtained in the case of the short term debt
the stock market has been in existence to date. Other
equation indicates the fol owing. The regression is
evidence provided by Demiguc-Kunt and Maksimovic
significant as evidenced by the p-value of the F-statistic
(1996) was that when a less-developed market doubled
and the values of R-squared and adjusted R-square are
in size, there would be an initial increase in debt-equity
equal y significant. With respect to the explanatory varia-
ratios before a decrease of 25% in debt-equity when the
bles, MCAP has a negative coefficient, contrary to expec-
size quadruples. Perhaps, the size of the Ghanaian stock
tation and significant only at 10% level of significance.
market is not yet significant to impact on financing
Further, turnover ratio is found to be significant at 5%
choices of firms on the exchange. Nonetheless, the com-
level of significance and negative, also contrary to expec-
plimentary factor to market liquidity and turnover ratio,
tation. However, STRD has a positive coefficient that is
showed a positive and significant relation which could be
not significant.
reflective of the initial change in size effect provided by

the authors. The authors also offer a third argument for

the direction of the change in leverage fol owing stock
DISCUSSION AND CONCLUSIONS
market development, that stock market development

would create opportunities for new diversification ability
The results obtained above needs to be looked at in the
for investors which would be used by firms to expand,
light of available evidence from other studies to bring out
through debt or equity issue. The direction of effect of
the implications of the current study and the conclusions
stock market development on leverage would then de-
drawn from this study. We take, first, the long-debt
pend on the choice made by the firm. This theory could
results. Market capitalization as a ratio of GDP seeks to
perhaps explain the results in this case providing sem-
measure the stock market size and it assumes that the
blance of some sort of equilibrium in the choice of
market size measures its ability to mobilize capital hence
financing by firms.
the negative relationship with debt finance. The present
Turnover ratio which has been found to be significant is

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Bopkin and Isshaq 215






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216 Afr. J. Bus. Manage.



Appendix

Table 1. Dickey-Ful er Test Results.

Variable
Test statistic value
MacKinnon approximate p-value
MCAP
-1.299
0.6296
STDE
-1.745
0.4083
LTDE
-1.299
0.6296
TR
-1.3.624
0.0053
STRD
-3.705
0.0040

Table 2. Correlation Matrix.

LTDE
MCAP
STRD
TR
LTDE
1.000000
0.122999
-0.011921
-0.028445
MCAP
0.122999
1.000000
0.379430
-0.302392
STRD
-0.011921
0.379430
1.000000
0.669755
TR
-0.028445
-0.302392
0.669755
1.000000

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