The influence of capital structure on firm profitability in USA and Bangladesh engineering industry

Abdelkader Derbali
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Abdelkader Derbali: Department of Finance and Accounting, Higher Institute of Informatics and Management of Kairouan, Kairouan University, Kairouan, Tunisia2Department of Administrative and Financial Sciences and Techniques, Community College, Taibah University, Medinah, Saudi Arabia

International Journal of Financial Engineering (IJFE), 2022, vol. 09, issue 02, 1-23

Abstract: The aim of this paper is not only to determine and compare the nature of capital structure but also its effect on company performance of engineering industry of USA and Bangladesh. We utilize a panel data methodology based on a sample of 34 listed engineering companies of Bangladesh on Dhaka Stock Exchange (DSE) and a mixture of 34 (small, medium and large) engineering companies listed in NASDAQ in USA during the period of study from 2012 to 2019. Our empirical results indicate that the capital structure of engineering industry of USA and that of Bangladesh is different. Also, we demonstrate that capital structure has negative effect on company profitability of engineering industry of USA. Capital structure presents a negative effect on Earning per Share and Return on Assets (ROA) and positive influence on Return on Equity (ROE) and Tobin’s Q of engineering industry of Bangladesh. We conclude that the impact of capital structure on company’s profitability by only one sector and then compare the findings to know the real picture of the link. Investors, auditors, analysts and practitioners should consider many factors to examine the banking performance. Our results from this study may relate to Asian countries with similarities in engineering industry to that in Bangladesh.

Keywords: Capital structure; firm performance; engineering industry; size of firm; NASDAQ; DSE (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S2424786321500298

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