Debt and profitability: evidence from Bangladesh

Mumtahina Islam and G.M. Wali Ullah

International Journal of Monetary Economics and Finance, 2020, vol. 13, issue 4, 362-382

Abstract: This study investigates the relationship of different capital structure determinants with the profitability of multinational companies (MNC) in order to determine the optimal choice of the capital structure. We have used the financial statements of 10 MNC listed in the Dhaka Stock Exchange (DSE) in Bangladesh in the year 2006-2017. The profitability is measured using the return on assets (ROA) and the return on equity (ROE). Data are analysed using multiple panel regression which reveals that the financial ratios, namely, the long term debt (LTD) and debt to equity (DE) are the significant variables in predicting the optimal capital structure of those MNC. The research findings imply that MNC financial managers should avoid long-term debt financing and therefore rely more on short-term financing options from the perspective of the capital market in Bangladesh.

Keywords: optimising capital structure; MNC; multinational companies; Bangladesh; Dhaka Stock Exchange. (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=109995 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmefi:v:13:y:2020:i:4:p:362-382

Access Statistics for this article

More articles in International Journal of Monetary Economics and Finance from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().