Abstract:
A general-purpose financial report prepared on the accrual basis of accounting derives its relevance from the going concern assumption. Going concern assumption underpins accounting recognition and measurement requirements. In Ghana, there‟s little empirical evidence to suggest going concern status is vital when making capital structure decisions. The study investigated the moderating role of capital intensity on the relationship between leverage and going concern of both listed financial and non-financial companies in Ghana. Using the generalized method of moments estimation technique (GMM), the study employed three multivariate discriminant scores as proxies for going concern, namely, adjusted Altman‟s score, Taffler‟s Z-score, and Springate‟s score. The study found that leverage had a positive relationship with the going concern of financial listed firms but posed a detrimental impact on the going concern of non-financial listed firms. The study also found that capital intensity had a positive relationship with the going concern of financial listed firms but harmed the going concern of non-financial firms. The study concludes that capital intensity moderates positively the relationship between leverage and going concern of financial and non-financial listed firms. The study recommends managers of financial firms obtaining debt financing consider a concurrent strategy of increasing a portion of fixed assets compared to total assets as a strategy to manage potentially going concern challenges.
