Impact of capital structure on firm's performance: Focusing on non-financial listed Egyptian firms

Abstract

The purpose of this paper is to investigate the impact of capital structure decisions on the performance of the firm. The investigation has been performed using a data of 62 listed non-financial Egyptian firms over a period of fourteen years from 2003-2016. This study used two measures for performance the dependent variable which are ROA and ROE, the most common used measures agreed upon on the majority of previous studies. Whereas, for the independent variable "the capital structure, the study uses the three measures of capital structure which are total debt to total assets (TD), total short-term debt to total assets (STD), and total long-term debt to total assets (LTD). The results showed when using ROA as a measure of performance, a significant negative impact of capital structure (TD, STD, and LTD) exists; while in case of using ROE as a measure of performance, there's a significant negative impact of capital structure only when using STD, otherwise a positive significant impact of capital structure exist.