The association between capital structure and the financial performance of non-financial firms listed on the Ghana Stock Exchange (GSE)

This study sought to examine the association between capital structure and the financial performance of non-financial firms listed on the Ghana Stock Exchange (GSE). Panel data extracted from the audited financial statements of 15 listed non-financial firms for the period 2008 to 2017 was employed for the study. The descriptive and inferential techniques of data analyses through the use of STATA version 15 software package with a 5% level of significance (p≤0.05), was adopted for the study. From the study's Pearson Product-Moment Correlation Coefficient estimates; capital structure proxied by DA had a significantly inverse affiliation with the firms’ financial performance as measured by ROA; capital structure proxied by DE had an insignificantly positive association with the firms’ financial performance as measured by ROA; capital structure proxied by ETA had a significantly positive association with the firms’ financial performance as measured by ROA; capital structure proxied by DA had an insignificantly positive association with the firms’ financial performance as measured by ROE; capital structure proxied by DE had a significantly inverse affiliation with the firms’ financial performance as measured by ROE;capital structure proxied by ETA had an insignificantly negative connection with the firms’ financial performance as measured by ROE; capital structure proxied by DA had an insignificantly positive relationship with the firms’ financial performance as measured by

ROCE; capital structure proxied by DE had a significantly adverse association with the firms’ financial performance as measured by ROCE; and capital structure proxied by ETA had an insignificantly inverse association with the firms’ financial performance as measured by ROCE. Based on the findings the study recommended that, the firms’ should pay proper attention to their capital structure compositions. The capital structure compositionsof the firms should be made with due consideration to information asymmetry and should be the ones that would minimize costs and maximize shareholders wealth. The government and other financial institutions, putting in place measures to lower the cost of borrowing would also be of great benefit to the firms in that, it would allow them to borrow at lower costs to advance their operations, thereby boosting their final bottom line.