Determinants of Capital Structure: A Study on Some Selected Corporate Firms in Bangladesh

Md. Shakhaowat Hossin and Sumon Mia
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Md. Shakhaowat Hossin: Assistant Professor, Department of Finance and Banking, Begum Rokeya University, Rangpur, Bangladesh
Sumon Mia: MBA, Department of Finance and Banking, Begum Rokeya University, Rangpur, Bangladesh

International Journal of Economics and Financial Research, 2020, vol. 6, issue 6, 111-120

Abstract: This paper scrutinizes Determinants of Capital Structure: A study on some selected corporate firms in Bangladesh. We have taken 10 out of 37 listed companies of DSE dividing into two sectors i.e. Pharmaceuticals and chemicals and Tannery sector, five years data from 2013 to 2017 has been collected from respective annual reports. Total number of observations was 50. There are different factors that affect a firm's capital structure decision. We use leverage (D/E ratio) as dependent variable and independent variables are profitability, tangibility, tax, size, growth, non -debt tax shield (NDTS) and financial costs. By using Descriptive Statistical Analysis, Correlation Analysis and Regression Analysis tools we find that Tangibility, size, NDTS, and financial costs are positively related with leverage and Profitability, tax, and growth are negatively related with leverage. In our analysis we see profitability, tangibility of asset, growth and non -debt tax shield have significant association. So when we take capital structure decision of the above firms we should consider profitability, tangibility of asset, growth and non -debt tax shield because other independent variables are insignificant in th e context of Bangladesh economy

Keywords: Capital structure; Leverage (Debt/equity ratio); Profitability; Non-debt tax shield (NDTS); Financial cost. (search for similar items in EconPapers)
Date: 2020
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