1Research Scholar, Department of Commerce, Vidyasagar University, Rangamati, Midnapore, West Bengal, India, Email: samadritaghosh002@gmail.com, Orcid: https://orcid.org/0000-0003-1762-4613
2Professor, Department of Commerce, Vidyasagar University, Rangamati, Midnapore, West Bengal, India, Email: abhijitsinha_091279@mail.vidyasagar.ac.in, Orcid: https://orcid.org/0000-0003-3034-0930
Online published on 15 September, 2025.
The study explores the intricate link between capital structure and firm performance. Existing research on the relationship between financial leverage and company results has mostly examined linear relationships; however, this study takes a fresh approach by investigating possible non-linearity as well in the capital structure-firm performance relationship. The paper uses sophisticated econometric approaches to estimate and analyze the potential non-linear dynamics between capital structure decisions and profitability measures, drawing on a dataset of BSE 100 companies. The panel regression on the data period from 2014 to 2023 shows that although the linear model shows a positive effect of the debt-equity ratio, the quadratic regression model finds no significant effect of the debt-equity ratio and its quadratic term on ROA. The research findings add to the body of literature and provide insight into the best capital arrangements for businesses.
Capital Structure, Performance, Non-linearity, Non-financial Companies, Return on Asset
