Impact of Capital Structure on The Performance of Non-Financial Firms in Emerging Markets: ‎Evidence from The Bombay Stock Exchange Using GMM Estimation

  • Authors

    • Dr. E. Gnanaprasuna Assistant Professor, Department of Management Studies, Madanapalle Institute of Technology & Science, ‎Madanapalle, Andhra Pradesh, India
    • Dr. Senthamizhselvi A Assistant Professor, VIT-AP School of Business, VIT-AP University, Amaravati, Andhra Pradesh, India
    • Dr.Avula Sreenivasulu Assistant Professor, Department of Management Studies, Kakaraparti Bhavanarayana College, Vijayawada, ‎Andhra Pradesh, India
    • Dr. V. Mouneswari Assistant Professor, School of management, Annamacharya University, Rajampet, Andhra Pradesh, India
    • Dr. B. Arun Kumar Associate Professor, Department of Management Studies, Kakaraparti Bhavanarayana College, Vijayawada, ‎Andhra Pradesh, India
    • Dr. K.Sankar Reddy Lecturer in Commerce, Government Degree College, Vedurukuppam, Chittoor, Andhra Pradesh, India
    https://doi.org/10.14419/wdz50q51

    Received date: August 28, 2025

    Accepted date: September 30, 2025

    Published date: October 17, 2025

  • Capital Structure; Firm Performance; Generalized Method of Moments; Leverage; Emerging Markets

  • Abstract

    This study investigates the effect of capital structure on the performance of 289 non-financial firms listed on ‎the Bombay Stock Exchange (BSE) from 2018 to 2023. Capital structure, defined as the mix of debt and ‎equity, significantly influences firm value. Unlike earlier studies focusing mainly on ROA or ROE, this ‎research includes net profit and gross profit margins. Using the two-step Generalized Method of Moments ‎‎(GMM) to address endogeneity, the study incorporates Modigliani and Miller’s theory, agency theory, and ‎the pecking order theory. Results show a negative relationship between long-term debt and firm ‎performance. Firm size positively impacts efficiency, while a higher dividend payout negatively correlates ‎with ROE. Sales growth enhances firm performance, and asset tangibility negatively affects efficiency. The ‎study is limited by its regional scope and five-year period, suggesting future research should include more ‎countries and extended timeframes for broader insights‎.

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  • How to Cite

    Gnanaprasuna , D. E. ., A, D. S. ., Sreenivasulu , D. ., Mouneswari , D. V. ., Kumar , D. B. A. ., & Reddy , D. K. . (2025). Impact of Capital Structure on The Performance of Non-Financial Firms in Emerging Markets: ‎Evidence from The Bombay Stock Exchange Using GMM Estimation. International Journal of Accounting and Economics Studies, 12(6), 624-631. https://doi.org/10.14419/wdz50q51