Examining the Influence of Capital Structure on the Performance of Firms Listed at the Dar es Salaam Stock Exchange

Abstract

The study examined the influences of capital structure on performance for firms listed at the Dar es Salaam stock Exchange. It applied descriptive statistics on nine non-financial firms listed at the DSE between 2020 and 2024. Secondary data were collected through website survey and documentary analysis. While correlation analysis was used to find out the relationship between dependent and independent variables, multiple linear regression analysis was used to investigate the impact of capital structure on firm performance. Capital structure was measured by the ratio of total debt to total equity, ratio of short-term debt to capital employed, ratio of long-term debt to capital employed and the ratio of total debt to capital employed. Performance was measured by return on asset (ROA) and return on equity (ROE).
The findings conclude that TD, LTD, STD and DE have significant negative relationship with ROA while there is no statistically significant relationship between firm performance and ROE. The study concludes that, in line with the Pecking Order Theory, capital structure has a negative relationship with firm performance.