IDEAS home Printed from https://ideas.repec.org/a/asi/adprev/v13y2025i1p38-53id5269.html
   My bibliography  Save this article

Effect of capital structure on economic success of the DSE-listed firms in Bangladesh: A moderating role of COVID-19 pandemic

Author

Listed:
  • Md. Rabiul Islam
  • Syed Zabid Hossain
  • Renhong Wu

Abstract

A firm's prudent use of debt and equity is an essential indicator of robust financial management. The study empirically evaluated the impact of capital structure (CS) on the economic performance of Bangladeshi companies from 2010 to 2022. It uses data from 1300 observations collected from 100 DSE-listed firms from 10 leading sectors of the economy. The outcome variables included ROE, ROA, EPS, and Q ratios. The explanatory variables were the capital structure proportions of short-term liabilities (STL), long-term liabilities (LTL), and the firm growth rate. The firm size was regarded as the control variable. The regression results revealed that STL negatively impacted ROA, ROE, and, most remarkably, EPS, while STL failed to impact Tobin's Q. LTL, on the other hand, had a positive impact on EPS and a negative impact on Tobin's Q, indicating that Bangladeshi firms do not exhibit overvaluation. STL and LTL positively impacted corporate financial performance during the pandemic compared to the pre-pandemic period. The implications of these findings are crucial for policymakers and corporate leaders. Organizations must demonstrate caution when employing short-term liabilities, especially during stable periods. This study underscores the imperative for industry-specific strategies concerning capital structure, as sectoral differences affect leverage outcomes.

Suggested Citation

  • Md. Rabiul Islam & Syed Zabid Hossain & Renhong Wu, 2025. "Effect of capital structure on economic success of the DSE-listed firms in Bangladesh: A moderating role of COVID-19 pandemic," Asian Development Policy Review, Asian Economic and Social Society, vol. 13(1), pages 38-53.
  • Handle: RePEc:asi:adprev:v:13:y:2025:i:1:p:38-53:id:5269
    as

    Download full text from publisher

    File URL: https://archive.aessweb.com/index.php/5008/article/view/5269/8139
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:asi:adprev:v:13:y:2025:i:1:p:38-53:id:5269. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Robert Allen (email available below). General contact details of provider: https://archive.aessweb.com/index.php/5008/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.