Influence of Capital Structure on Firm Performance: Evidence from Bangladesh

By Md. Bokhtiar Hasan, PhD, A. Ahsan, Md. Afzalur Rahaman, Md. Nur Alam. 2014

151 citations recorded by the source corpus.

This paper mainly studies the influence of capital structure on firm’s performance. This investigation has beenperformed on a sample of 36 Bangladeshi firms listed in Dhaka Stock Exchange during the period 2007–2012.We have used four performance measures; earnings per share (EPS), return on equity (ROE), return of asset(ROA) and Tobin’s Q; as dependent variables and three capital structure ratios; short-term debt, long-term debtand total debt ratios; as independent variables. Using pooling panel data regression method, we found that EPSis significantly positively related to short-term debt while significantly negatively related to long-term debt.There is significant negative relation between ROA and capital structure. On the other hand, there is nostatistically significant relation exists between capital structure and firm’s performance as measured by ROE andTobin’s Q. Nonetheless, aside from the positive relation between EPS and STDTA, we can conclude that capitalstructure has negative impact on firm’s performance which is consistent with the proposition of Pecking OrderTheory.

Subfields: Accounting

View Paper: https://www.semanticscholar.org/paper/f8df6059208301aa34c9f47b57c338f47bfbd638

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Citations in the corpus

Impacts of Capital Structure on Performance of Banks in a Developing Economy: Evidence from Bangladesh (2017, methodology): “A similar study by Hasan et al. (2014) excluded the performance of bank sector and inspected the effects of capital structure choice on the performance of Bangladeshi firms over the period of 2007–2012. The authors used ROA, ROE, EPS and Tobin’s Q as the measures of performance. Applying pooled OLS,”