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

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Author(s)
Manawaduge, Athula
Zoysa, Anura
Chowdhury, Khorshed
Chandarakumara, Anil
Griffith University Author(s)
Year published
2011
Metadata
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This paper offers an empirical analysis of the impact of capital structure on firm performance in the context of an emerging market-Sri Lanka. The study applies both pooled and panel data regression models for a sample of 155 Sri Lankan-listed firms. The results demonstrate that most of the Sri Lankan firms finance their operations with short-term debt capital as against the long-term debt capital and provide strong evidence that the firm performance is negatively affected by the use of debt capital. The study also finds a significant negative relationship between tangibility and performance indicating inefficient utilization ...
View more >This paper offers an empirical analysis of the impact of capital structure on firm performance in the context of an emerging market-Sri Lanka. The study applies both pooled and panel data regression models for a sample of 155 Sri Lankan-listed firms. The results demonstrate that most of the Sri Lankan firms finance their operations with short-term debt capital as against the long-term debt capital and provide strong evidence that the firm performance is negatively affected by the use of debt capital. The study also finds a significant negative relationship between tangibility and performance indicating inefficient utilization of non-current assets. The negative performance implications associated with over-utilization of short-term debts and the under-utilization non-current assets provide corporate managers with useful policy directions.
View less >
View more >This paper offers an empirical analysis of the impact of capital structure on firm performance in the context of an emerging market-Sri Lanka. The study applies both pooled and panel data regression models for a sample of 155 Sri Lankan-listed firms. The results demonstrate that most of the Sri Lankan firms finance their operations with short-term debt capital as against the long-term debt capital and provide strong evidence that the firm performance is negatively affected by the use of debt capital. The study also finds a significant negative relationship between tangibility and performance indicating inefficient utilization of non-current assets. The negative performance implications associated with over-utilization of short-term debts and the under-utilization non-current assets provide corporate managers with useful policy directions.
View less >
Journal Title
Corporate Ownership & Control
Volume
8
Issue
4
Copyright Statement
© 2011 VirtusInterpress. The attached file is reproduced here in accordance with the copyright policy of the publisher. Please refer to the journal's website for access to the definitive, published version.
Subject
Financial Accounting
Accounting, Auditing and Accountability
Banking, Finance and Investment
Business and Management