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Impact Of Capital Structure Policy On Value Of The Firm – A Study On Some Selected Corporate Manufacturing Firms Under Dhaka Stock Exchange

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  • Jahirul HOQUE

    (Eastern University, Dhaka, Bangladesh)

  • Ashraf HOSSAIN

    (Eastern University, Dhaka, Bangladesh)

  • Kabir HOSSAIN

    (Eastern University, Dhaka, Bangladesh)

Abstract

The study is about capital structure policy and its impacts on value of the firm. The outcome of this study was both the primary and secondary data. The study was based on opinions survey of 80 respondents of the 20 manufacturing corporate firms, enlisted under Dhaka Stock Exchange. The empirical analysis of the study was limited to a period of five years ranging 2008-2012. The major findings of the study are: (i) the most important determinant of capital structure policy as rated by the respondents have been financial risk , profitability, availability of fund, productivity, liquidity, operating risk, growth rate, proper timing, corporate tax, stability of sales/ investment etc, (ii) the study reveals that in terms of the average positions of capital structure and financial structure during 2008-2012, Beximco pharma has ranked first followed by Square pharma, Apex Adelchi, DESCO, ACI ltd, Titas gas, Bata shoe,Aftab automobile, Reneata pharma, Square textile ltd etc,(iii) as regards the value of the firm during the study period, Titas gas has obtained first rank followed by Square pharma, DESCO, Beximco pharma, BATBC, ACI, Reneta pharma, Apex Tennary, Apex Adelchi, Bata shoe and so on.(iv) this study has portrayed that the independent variables namely capital structure (CS), debt to equity (DER) & debt to asset (DR), fixed assets to total assets(Tangibility), earnings before interest and taxes to interest charges(ICR), financial leverage multiplier(FLM) have influenced value of the firm(VF) to the extent of 79.1 percent significantly. Therefore, it is recommended that the relevant firm’s authority should take proper measures in order to improve the independent variables having positive influence on value of the firms.

Suggested Citation

  • Jahirul HOQUE & Ashraf HOSSAIN & Kabir HOSSAIN, 2014. "Impact Of Capital Structure Policy On Value Of The Firm – A Study On Some Selected Corporate Manufacturing Firms Under Dhaka Stock Exchange," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 3(2), pages 1-9, July.
    • Handle: RePEc:scm:ecofrm:v:3:y:2014:i:2:p:9
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    References listed on IDEAS

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    1. Attaullah Shah & Tahir Hijazi, 2004. "The Determinants of Capital Structure of Stock Exchange-listed Non-financial Firms in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 605-618.
    2. Md. Faruk Hossain & Md. Ayub Ali, 2012. "Impact of Firm Specific Factors on Capital Structure Decision: An Empirical Study of Bangladeshi Companies," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 3(4), pages 163-182, August.
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    Cited by:

    1. Mirza Muhammad Naseer & Muhammad Asif Khan & József Popp & Judit Oláh, 2021. "Firm, Industry and Macroeconomics Dynamics of Stock Returns: A Case of Pakistan Non-Financial Sector," JRFM, MDPI, vol. 14(5), pages 1-18, April.
    2. Osaretin Kayode Omoregie & Sodik Adejonwo Olofin & Fredrick Ikpesu, 2019. "Capital Structure and the Profitability-Liquidity Trade-off," International Journal of Economics and Financial Issues, Econjournals, vol. 9(3), pages 105-115.
    3. Nham T.H. Nguyen & Bao K.Q. Nguyen & Bao C.N. To & Tam T.H. Le, 2021. "Capital Structure and Performance in Vietnamese Construction Firms: Using Quantile Regression Approach," Economics Bulletin, AccessEcon, vol. 41(3), pages 1357-1373.

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