Capital structure and firm performance in emerging economies: An empirical analysis of Sri Lankan firms

Manawaduge, Athula S; Zoysa, Anura De; Chowdhury, Khorshed; Chandarakumara, Anil

doi:10.22495/cocv8i4c2art2

Cited by 21 publications

(29 citation statements)

References 28 publications

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“…DW statistics reveals that there is no autocorrelation in the models. These results are consistent with Rajan and Zingales (1995), Gleason et al (2000), Manawaduge et al (2011), Ali and Iman (2011), Salim and Yadav (2012, Anup and Suman (2010) and Nor and Fatihah (2012) who found a significant negative relationship between capital structure and firm's performance. Note.…”

Section: Regression Analysissupporting

confidence: 85%

“…Using a sample of 130 firms for the period 2001-2010 combined with multiple regression analysis, they cited a statistical significant negative relation between capital structure and firms' performance. Manawaduge, Zoysa, Chowdhury, and Chandarakumara (2011) concluded that most of the Sri Lankan firms employ short-term debt capital as against the long-term debt and firm performance is negatively affected by the use of debt. Similar result was also noticed in Nigeria by Amos and Jeremiah (2013).…”

Section: Literature Reviewmentioning

confidence: 99%

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Influence of Capital Structure on Firm Performance: Evidence from Bangladesh

Hasan¹,

Ahsan²,

Rahaman³

et al. 2014

IJBM

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This paper mainly studies the influence of capital structure on firm's performance. This investigation has been performed 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 debt and total debt ratios; as independent variables. Using pooling panel data regression method, we found that EPS is 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 no statistically significant relation exists between capital structure and firm's performance as measured by ROE and Tobin's Q. Nonetheless, aside from the positive relation between EPS and STDTA, we can conclude that capital structure has negative impact on firm's performance which is consistent with the proposition of Pecking Order Theory.

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Section: Regression Analysissupporting

confidence: 85%

Section: Literature Reviewmentioning

confidence: 99%

Influence of Capital Structure on Firm Performance: Evidence from Bangladesh

Hasan¹,

Ahsan²,

Rahaman³

et al. 2014

IJBM

View full text Add to dashboard Cite

show abstract

“…According to the results (see Table 8), there is significant and negative relationship between STDTA and Tobin"s Q. This result is consistent with the findings of Khan (2012), while it contradicts with the studies of Zeitun and Tian (2007), Manawaduge et al (2011) andSalim andYadav (2012). Moreover, we find that LTDTA is significantly and negatively correlated with Tobin"s Q.…”

Section: Discussionsupporting

confidence: 40%

Capital Structure and Firm Performance: An Analysis of Manufacturing Firms in Turkey

Tifow¹,

Sayılır²

2015

EJBM

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Capital structure is one of the most important issues for firms in order to achieve better financial and market performance. The main objective of this study is to examine the relationship between capital structure and firm performance. We investigate 130 manufacturing firms listed on Borsa Istanbul for the period of 2008-2013 using panel data analysis. We utilize short term debt to total asset (STDTA) and long term debt to total asset (LTDTA) as proxies of financial leverage (independent variables). Return on equity (ROE), return on asset (ROA), earnings per share (EPS) and Tobin"s Q ratio were used as proxies of firm performance (dependent variables). Sales growth rate and firm size were used as control variables in the study. We find that STDA has a significant negative relationship with ROA, EPS and Tobin"s Q ratio. Besides, we find that LTDTA has a significant negative relationship with ROE, EPS and Tobin"s Q ratio, while it is positively and significantly correlated with ROA.

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“…They used panel data of 237 Malaysian companies for 1995-2011 and observed a significant negative influence of TDTA, LTDTA and STDTA on EPS, ROA, ROE and Tobin's Q. Manawaduge et al (2011), in the context of an emerging market, scanned the influence of leverage on Sri Lankan firms' profitability. An analysis of pooled panel data of 155 firms over the period of 2002-2008 indicated an inverse influence of leverage on the profitability of firms.…”

Section: Negative Conclusionmentioning

confidence: 99%

Impacts of Capital Structure on Performance of Banks in a Developing Economy: Evidence from Bangladesh

Siddik

Kabiraj

Joghee

2016

Preprint

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Capital structure decision plays an imperative role in firm’s performance. Recognizing the importance, there has been many studies inspected the rapport of capital structure with performance of firms and findings of those studies are inconclusive. In addition, there is relative deficiency of empirical studies examining the link of capital structure with performance of banks in Bangladesh. This paper attempted to fill this gap. Using panel data of 22 banks for the period of 2005-2014, this study empirically examined the impacts of capital structure on the performance of Bangladeshi banks assessed by return on equity, return on assets and earnings per share. Results from pooled ordinary least square analysis show that there are inverse impacts of capital structure on bank’s performance. Empirical findings of this study is of greater significance for the developing countries like Bangladesh because it will call upon concentration of the bank management and policy makers to pursue such policies to reduce reliance on debt and to accomplish optimal level capital structure. This research also contributes to empirical literatures by reconfirming (or otherwise) findings of previous studies.

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Capital structure and firm performance in emerging economies: An empirical analysis of Sri Lankan firms

Cited by 21 publications

References 28 publications

Influence of Capital Structure on Firm Performance: Evidence from Bangladesh

Influence of Capital Structure on Firm Performance: Evidence from Bangladesh

Capital Structure and Firm Performance: An Analysis of Manufacturing Firms in Turkey

Impacts of Capital Structure on Performance of Banks in a Developing Economy: Evidence from Bangladesh

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