Capital Structure and Financial Performance: Evidence from Sugar Industry in Karachi Stock Exchange Pakistan

Abstract

This paper examines the impact of capital structure on financial performance of Nigerian firms using a sample of thirty non-financial firms listed on the Nigerian Stock Exchange during the seven year period, 2004 – 2010. Panel data for the selected firms were generated and analyzed using ordinary least squares (OLS) as a method of estimation. The result shows that a firm’s capita structure surrogated by Debt Ratio, Dr has a significantly negative impact on the firm’s financial measures (Return on Asset, ROA, and Return on Equity, ROE). The study of these findings, indicate consistency with prior empirical studies and provide evidence in support of Agency cost theory.