Impact of capital structure on firm’s value: Evidence from Bangladesh

Modigliani & Miller (1958) show the impact of debt-equity ratio on firm value in their capital structure theory. Economist and financial researchers have spent time to develop new thoughts around this theory. Despite their effort the Modigliani & Miller (MM) model is still in vague. In this paper attempt has been made to empirically support the argument of MM. The paper tests the influence of debt-equity structure on the value of shares given different sizes, industries and growth opportunities with the companies incorporated in Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) of Bangladesh. For the robustness of the analysis samples are drawn from the four most dominant sectors of industry i.e. engineering, food & allied, fuel & power, and chemical & pharmaceutical to provide a comparative analysis. A strong positively correlated association is evident from the empirical findings when stratified by industry.


Issue Date:
Oct 25 2010
Publication Type:
Journal Article
DOI and Other Identifiers:
ISSN 1804-1205 (Print) ISSN 1804-5006 (Online) (Other)
PURL Identifier:
http://purl.umn.edu/128681
Published in:
Business and Economic Horizons, Volume 03, Issue 3
Business and Economic Horizons
Page range:
111-122
Total Pages:
12
JEL Codes:
G1; G3




 Record created 2017-04-01, last modified 2017-08-26

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