1School of Finance and Economics, Jiangsu University,
2School of Finance and Economics, Jiangsu University,
This study sought to examine the influence of capital structure on the financial performance of firms listed on the Ghana Alternative Market (GAX), a subsidiary of the Ghana Stock Exchange (GSE).The study adopted the purposive sampling technique in selecting its sample. This technique was employed because it was flexible and met the multiple needs and interests of the researcher. An unbalanced secondary data extracted from the audited and published annual reports of the HORDS, Intravenous Infusions, Meridian-Marshalls Holdings and Samba Foods Ltd for the period 2015 to 2018 was employed for the study. Thus, the statement of comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity and notes to the accounts provided the study’s data. In this study, Debt-to-Total Assets (DA) was used to proxy capital structure (explanatory variable) whilst Return on Capital Employed (ROCE), Return on Assets (ROA) and Return on Issued Capital (ROIC) served as proxies for financial performance (explained variable). The descriptive and inferential techniques of data analysis were used for the study. These analysis were conducted through the use of STATA version 15software package at an alpha (a) level of 5%(p<0.05). From the study’s Pearson Product-Moment Correlation Coefficient estimates, capital structure had a significantly negative relationship with the firms’ financial performance, whilst the study’s Robust Ordinary Least Squares (OLS) regression output provided evidence of capital structure having a significantly adverse influence on the firms ‘financial performance as measured by ROCE, ROA and ROIC.Based on the findings, the researchers recommended among others that, since capital structure was a significant determinant of the firms’ financial performance, they should operate with a capital structure mix that would minimize costs and maximize their final bottom line
Influence, Capital Structure, Financial Performance, Ghana Alternative Market (GAX), Return on Assets (ROA), Return on Capital Employed (ROCE), Return on Issued Capital (ROIC)
