Capital structure and firm performance in the GCC

Abstract

ABSTRACT : Purpose - The purpose of this study is to find the relationship between capital structure and firm performance in the developing market economies of the GCC region. To do so, analysis was performed on the GCC region as whole, in addition to a country analysis, industry analysis and size of the firm analysis to observe the effect of different control variables. Methodology - Using a sample of 111 firms from the consumer services, consumer non- durable services and producer manufacturing sectors of the GCC region for a period of 10 years (2004-2014), stepwise regression analysis was used to determine the relationship between capital structure and firm performance. Findings - After analysis, the results show that there is a significant relationship between capital structure and firm performance. Moreover, growth in assets and size of the firm were found to be significant in determining both capital structure and firm performance. Originality/Value - The existing literature on capital structure and firm performance in developing economies is very scanty; this study tries to fill in the existent gap. Keywords - Capital structure, Performance, GCC, ROA, Regression. Paper type - MBA project