Search results

1 – 1 of 1
Open Access
Article
Publication date: 16 November 2023

P.K. Priyan, Wakara Ibrahimu Nyabakora and Geofrey Rwezimula

The study aims to evaluate the influence of capital structure decisions and asset structure on firms' performance for East African listed nonfinancial firms.

1853

Abstract

Purpose

The study aims to evaluate the influence of capital structure decisions and asset structure on firms' performance for East African listed nonfinancial firms.

Design/methodology/approach

The research is descriptive and employs secondary data from the East African capital markets' websites. The generalized method of moments approach is used to estimate the relationship due to its ability to account for endogeneity problems.

Findings

The result shows that capital structure decisions and asset structure strongly influence the firms' performance. When long-term debts, short-term debts and tangible fixed assets increase, the return on total assets increases. An increase in the total debt ratio raises the return on equity (ROE). However, the increase in long-term debt lowers the ROE.

Practical implications

The results will help investors and potential investors decide on a financing policy that maximizes performance. Likewise, governments and other policymakers review the capital markets' frameworks to attract institutional and individual investors to the markets for financial availability and to increase profitability.

Originality/value

The research provides evidence on the influence of capital structure decisions and asset structure on firms' performance. Furthermore, its results contribute to firms' financing policy formulation and the corporate finance literature.

Details

PSU Research Review, vol. 8 no. 3
Type: Research Article
ISSN: 2399-1747

Keywords

1 – 1 of 1