Issue

Vol. 2 No. 1 (2025): January

Capital Structure and Firm Performance: Evidence from Turkish Manufacturing Firms

https://doi.org/10.62810/jssh.v2i1.28
Ahsanullah Barakzai
Kabul University, Economics Faculty, Department of BBA Administration, Kabul, Afghanistan.

Corresponding Author(s) : Ahsanullah Barakzai

A.Barakzay@yahoo.com

Journal of Social Sciences & Humanities, Vol. 2 No. 1 (2025): January

Abstract

One of a company's most crucial financial management decisions is its capital structure, which, when adopted correctly and successfully, can almost ensure its objectives are met. Capital structure affects the cost of capital and is important in enhancing a company's operational performance. The capital structure decision is a cornerstone of corporate financial management, influencing both short-term performance and long-term viability. To find the best debt-to-equity ratio for sustainable growth and shareholder value, businesses must carefully consider their industry dynamics, business climate, and financial objectives. Given the importance of this issue, this study's main goal is to look into how capital structure decisions affect the financial performance of Turkish firms in the food, textile, and fabricated metal subsectors between 2011 and 2020. In this study, short-term liability (STL) and long-term liability (LTL) are used as capital structure measures, return on Assets and return on equity are used as firm performance measures, and sales growth and company size are considered control variables. The findings of this study indicate a negative association between debt and the operating performance of these companies in all three sectors. This implies that companies in the aforementioned industries will have to forfeit some of their company's worth if they raise the amount of debt in their capital mix.

Keywords

Capital structure Firm performance Long Term Liabilities Return on Asset Return on Equity Short Term Liabilities
Barakzai, A. (2025). Capital Structure and Firm Performance: Evidence from Turkish Manufacturing Firms. Journal of Social Sciences & Humanities, 2(1), 13–31. https://doi.org/10.62810/jssh.v2i1.28
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