Capital structure & corporate performance: A panel data analysis of Pharmaceutical Manufacturing Firms in Ethiopia
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Date
2018-10
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Addis Ababa University
Abstract
This study investigated the relationship between capital structure and financial performance of
pharmaceutical manufacturing firms in Ethiopia. Seven (out of nine) pharmaceutical
manufacturing firms operating in Ethiopia were considered in the study. Those pharmaceutical
manufacturing firms that have been ten and more years in operation were taken with the idea of
increasing the volume of data. The study employed descriptive survey research design and the
data was collected from secondary sources i.e. audited financial statements of the respective
firms. The data were extracted from the financial statements of respective firms for the period
2007-2016. The study applied panel data models (fixed effects). A computer package EVIEWS 9
was used to solve the multiple regression equations used in this study. Ordinary Least Square
(OLS) regression results revealed that long term debt to equity ratio (LTD) has significant
negative relationship with return on asset while total debt to asset ratios (TDA) had a
statistically significant positive association with performance as measured by return on assets
(ROA). All control variables used in the models (Age, SIZE, LQ, & SG) has statistically
significant relation with return on asset.
Description
A thesis submitted to Addis Ababa University College of Business and Economics
MBA Program Presented in Partial Fulfillment of the Requirements for the Degree of
Masters of Business Administration
Keywords
Capital structure, Ethiopia, Financial performance, Pharmaceuticals