Impact of Capital Structure on the Firm Performance: Moderating Role of Firm Size

Abstract

The primary aim of the research was to explore the influence of capital structure based on the business performance in context to the moderating role of firm size. In consideration of the main aim of the study, the objectives of the research were to comprehend the notion of the impact of capital structure on the firm performance with regards to the moderating role of firm size, to examine the factors affecting the capital structure on the firm performance in context to the moderating role of firm size, to determine the relationship of capital structure on the firm performance considering the moderating role of firm size, to address recommendations with accordance to capital structure on the firm performance: moderating role of firm size. Secondary data collection method has been utilised to attain the fresh and unique findings. In this context, data has been collected from the annual reports of the Pakistan commercial banks from the years 2011 till 2020. The banks included as Allied Bank Limited, Askari Bank Limited, Habib Bank Limited, MCB Bank Limited, Meezan Bank Limited, Faysal Bank Limied, United Bank Limited, Silk Bank Limited, National Bank of Pakistan and Bank Al-Habib Limited. For such concern, data has been collected in respective to the independent and dependent variables including ROE, ROA, total asset, total debt and equity. It has been validated that the firm performance is largely dependent on the firm capital structure specifically in terms of debt and equity. As the independent variables total equity and debt has been resulted as the significantly correlated with the dependent variable ROE and ROA. Whilst the moderating variable total asset also has the significant impact on the dependent variables. Key Words: ROE , ROA , Capital Structure

The Effect of Green Infrastructure Investment, Capital Structure, and Operational Efficiency on Financial Performance of Companies in Central Java

“…A firm's capital structure, which includes a mix of debt and equity financing, significantly affects its financial performance and risk exposure. Traditional finance theories, such as the Modigliani and Miller Theory, emphasise the importance of striking a balance between the tax benefits of debt and the drawbacks associated with financial distress and agency conflicts arising from high leverage [21], [22]. Research has shown that the composition of capital structure, including short-term debt, long-term debt, and equity, impacts firm performance in various sectors [23].…”