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.

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Martin Svoboda

Ancient Greece, its history, philosophy and literature, that has been my love since childhood. Although my profession is only marginally related to all this - I work as a revision technician in a certain undisclosed company. In addition, I recreationally train in martial arts and prepare for a marathon. This blog is an opportunity for me to share with you everything that no longer fits into other boxes of my life.

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