University of Twente Student Theses


Capital structure: Debt and equity decisions for firm performance

Alikouzay, Zohal (2021) Capital structure: Debt and equity decisions for firm performance.

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Abstract:The main objective of this thesis is to investigate the relationship between capital structure and firm performance using a data sample of 548 technological firms listed on the NASDAQ Composite Exchange for the period of 2017-2020. This study uses three performance measures (including return on assets (ROA), return on equity (ROE) and Tobin's Q) as dependent variables and three capital structure measures (including total debt (TD), long-term debt (LTD) and short-term debt (STD)) as independent variables. The findings reveal a non-linear (U-shaped) relationship between capital structure and accounting performance variables return on equity (ROE) and market performance measure Tobin's Q. Additionally, both short-term debt and long-term debt have a negative relationship with the firm's performance measure, return on assets (ROA). Overall, this research shows that capital structure has a negative relationship with firm performance.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
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