Impact of Capital Structure on the Firm Value: Case Study of Listed Manufacturing Companies in Sri Lanka

Scholars World-IRMJCR, Volume. III, Issue I, January 2015

7 Pages Posted: 8 Jan 2015

See all articles by K. Priya

K. Priya

University of Jaffna

Nimalathasan Balasundaram

University of Jaffna

Tharmalingam Pratheepan

University of Jaffna

Date Written: January 7, 2015

Abstract

Capital structure is one of the most complex areas of financial decision making because of its interrelationship with other financial decision variables. Capital structure choice is an important decision for a firm. It is important not only from returns maximization point of view, but also because this decision has a great impact on a firm’s ability to successfully operating competitive environment. In this study, an attempt has been made to analyze the Capital Structure and Firm Value during 2008 to 2012 (05 years) financial year of listed manufacturing companies in Sri Lanka. For the purpose of this study, the data was extracted from the annual reports of sample companies. Correlation and multiple regression analysis are used for analysis with the STATA 12 versions. The results revealed that Capital Structure has an impact on firm value ratio. Further Equity Ratio is negatively correlated with EPS, which are significant 5 and 1 percent level of significance respectively.

Keywords: Capital Structure, Market Value, Financing Pattern

Suggested Citation

Priya, K. and Balasundaram, Nimalathasan and Pratheepan, Tharmalingam, Impact of Capital Structure on the Firm Value: Case Study of Listed Manufacturing Companies in Sri Lanka (January 7, 2015). Scholars World-IRMJCR, Volume. III, Issue I, January 2015, Available at SSRN: https://ssrn.com/abstract=2546225

K. Priya

University of Jaffna

Sri Lanka
Jaffna, North 40000
Sri Lanka

Nimalathasan Balasundaram

University of Jaffna ( email )

Northern
Sri Lanka
+94-21-2227519 (Phone)
+94-21-2223610 (Fax)

HOME PAGE: http://www.nimalathasan.com

Tharmalingam Pratheepan (Contact Author)

University of Jaffna ( email )

Sri Lanka
Jaffna, North 40000
Sri Lanka

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