Capital structure and firm performance: a comprehensive study of firms in the oil and manufacturing industry listed on the ghana stock exchange

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Date
2023
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KNUST
Abstract
Capital structure decisions of firms are often considered to be of so much relevance in commercial banks and any other firms as firms cannot bring to birth their viable investment project without what is considered the fuel that fuels the engine of operations of firms: capital. As a result, this study seeks to examine the impact of capital structure on the firm performance of energy and manufacturing firms listed on the Ghana Stock Exchange (GSE). Panel regression estimation techniques are used to analyze 100 firm-year observations for the period 2011 to 2020. Generally, the empirical results show that, long term debt to Total assets has a negative relationship with firm performance proxied with Return on equity, short term debt to total assets is negatively associated with energy and manufacturing firms’ profitability proxied with return on equity, total debt to total equity is negatively associated with energy and manufacturing firms’ profitability proxied with return on equity all of these were statistically significant despite the negative relationships. Based on this, the study recommended that since capital structure (short-term debt, long-term debt) have significant influence on the profitability (return on equity) of the firms, it is recommended that the management of firms to be proactive and innovative in the use or application of assets to generate higher return
Description
A Thesis submitted to the Department of Accounting and Finance College of Humanities and Social Sciences In partial fulfilment of the requirements for the degree of msc. finance
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