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

Journal Article


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.

Publication Date


  • 2011

Citation


  • Manawaduge, A. S., De Zoysa, A., Chowdhury, K. & Chandrakumara, P. (2011). Capital structure and firm performance in emerging economies: an empirical analysis of Sri Lankan firms. Corporate Ownership and Control, 8 (4), 253-263.

Scopus Eid


  • 2-s2.0-84897145338

Ro Metadata Url


  • http://ro.uow.edu.au/commpapers/1936

Number Of Pages


  • 10

Start Page


  • 253

End Page


  • 263

Volume


  • 8

Issue


  • 4

Place Of Publication


  • http://www.virtusinterpress.org/journals-coc-concept-journal.html

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.

Publication Date


  • 2011

Citation


  • Manawaduge, A. S., De Zoysa, A., Chowdhury, K. & Chandrakumara, P. (2011). Capital structure and firm performance in emerging economies: an empirical analysis of Sri Lankan firms. Corporate Ownership and Control, 8 (4), 253-263.

Scopus Eid


  • 2-s2.0-84897145338

Ro Metadata Url


  • http://ro.uow.edu.au/commpapers/1936

Number Of Pages


  • 10

Start Page


  • 253

End Page


  • 263

Volume


  • 8

Issue


  • 4

Place Of Publication


  • http://www.virtusinterpress.org/journals-coc-concept-journal.html