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
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Alex Kostyuk

Date
2011
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Abstract

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.

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Corporate Ownership & Control

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8

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4

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© 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.

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Financial Accounting

Accounting, Auditing and Accountability

Banking, Finance and Investment

Business and Management

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