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The relationship between capital structure measures and financial performance: Evidence from Ghana

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dc.contributor.author Mireku, Kwame
dc.contributor.author Mensah, Samuel
dc.date.accessioned 2021-09-08T13:51:08Z
dc.date.available 2021-09-08T13:51:08Z
dc.date.issued 2014-05-22
dc.identifier.issn 23105496
dc.identifier.uri http://hdl.handle.net/123456789/6076
dc.description 10p:, ill. en_US
dc.description.abstract One of the areas that has been a focus of intense debate when it comes to capital structure research is whether to use the book value or market value of capital structure as the accurate measure of financial leverage (Salehi & Biglar, 2009). Various arguments have been raised in favour of which of the measures researcher should use in capital structure studies. However, much has not been done to determine which of the measures has a more significant relationship with financial performance. Therefore the thrust of this paper was to establish the relationship between capital structure measures and financial performance so to determine which of the capital structure measures has a stronger association with financial performance. Two definitions of capital structure measures (book value & market value) and six financial performance measures were used. For this study, fifteen companies on the Ghana Stock Exchange (GSE) were selected over a 6-year time period (2002–2007). The outcome of the study established that the capital structure of firms influences their performance. Many measures of firm performance were negatively correlated with financial leverage. Meaning, companies with less debt in Ghana have high profit margins and good financial performance. The study established that the market value of capital structure has a stronger relation with financial performance as compared to the book value. Researchers should therefore consider first, the use of market value in any studies on capital structure en_US
dc.language.iso en en_US
dc.publisher University of Cape Coast en_US
dc.subject Capital structure en_US
dc.subject Book value en_US
dc.subject Market value en_US
dc.subject Financial performance en_US
dc.title The relationship between capital structure measures and financial performance: Evidence from Ghana en_US
dc.type Article en_US


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