Open AccessCAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF FOOD INDUSTRY: AN AGRO-BASED EMERGING ECONOMY PERSPECTIVE
Publication year - 2022
Publication title -
international journal of accounting and finance review
Language(s) - English
Resource type - Journals
eISSN - 2576-1293
pISSN - 2576-1285
DOI - 10.46281/ijafr.v10i1.1654
Subject(s) - return on equity , profitability index , panel data , return on assets , leverage (statistics) , capital structure , stock exchange , business , fixed effects model , population , ordinary least squares , debt to equity ratio , debt ratio , finance , economics , debt , econometrics , demography , machine learning , sociology , computer science , nonprobability sampling
This study aims to investigate the relationship between capital structure and profitability of food industry from an agro-based emerging economy perspective. To attain the objective, we have compiled panel data food and allied companies, representing 64% of total population, listed in Dhaka Stock Exchange and administered ordinary least square (OLS), fixed effect model (FEM), and random effect model (REM) estimate to test the impact of capital structure on the profitability of listed food companies in Bangladesh. The current study usage three proxy variables as the measure of profitability, viz., return on assets (ROA), return on equity (ROE), and earnings per share (EPS). Our panel data estimation using EViews 10 demonstrates that short term leverage has a significant negative impact on ROA (OLS model) and a strong positive impact on ROE (REM estimation) of the listed food and allied firms. However, the study do not produce any significant effects of long term debt on the firm profitability. The findings of the current study help develop the understanding of the corporate managers, investors, policy makers, and academics about the relationship between optimum financing mix and financial performance of food industries and provides valuable insights from an agro-based emerging economy perspective.