Capital structure and firms performance: Evidence from Kuwait

• Main Author: Menacer, Abdesslam
• Format: Thesis
• Language: English; English
• Published: 2014
• Subjects: HG Finance
• Online Access: https://etd.uum.edu.my/4568/1/s813034.pdf; https://etd.uum.edu.my/4568/2/s813034_abstract.pdf; https://etd.uum.edu.my/4568/

The purpose of this study is to examine the impact of capital structure on the performance of 192 firms listed on the stock exchange of Kuwait, covering from year 2009 to 2013. There are very little empirical studies in the existing literature that investigate the influence of capital structure on performance of Kuwaiti firms. Following previous studies, this study hypothesizes that capital structure will positively influence the performance of Kuwaiti firms. In this respect, capital structures are measured by the total debt to equity ratio (TDE) and total debt to assets ratio (TDA). Meanwhile, the performance variables are measured by the return on assets (ROA) and return on equity (ROE). This study also includes firm specific variables as control variables such as capital expenditure to sales, sales growth, and firm size. By using pooled OLS estimation, the results indicate that there is a positive and significant relationship between TDE and ROE, while TDA is negatively but significantly related with the ROE. Then, the findings show a positive but insignificant impact between TDE and ROA, whereas TDA is negatively and insignificantly related with ROA. The findings also reveal that firm specific variables such as capital expenditure to sales, firm size, and sales growth demonstrate a significant and positive relationship with the ROA and ROE.