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Does Capital Structure Affect the Profitability of Listed Family and Non-Family Firms? Evidence from Bangladesh

Mohammad Rajon Meah


Nasir Uddin Chaudhory


Md. Ibrahim Khalil

Mohammad Rajon Meah 1

Nasir Uddin Chaudhory 2
Md. Ibrahim Khalil 3

  1. Lecturer (Accounting), Department of Civil Engineering, Uttara University, Dhaka, Bangladesh. 1

  2. Master of Science in Accountancy, The University of Toledo, Ohio, USA. 2

  3. MBA, Department of Management, University of Dhaka, Dhaka, Bangladesh. 3

Pages: 131-145

DOI: 10.18488/journal.62.2020.73.131.145

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Article History:

Received: 28 January, 2020
Revised: 02 March, 2020
Accepted: 06 April, 2020
Published: 17 April, 2020


The aim of this study is to examine the impact of capital structure on firm performance. The proxy variables of capital structure are short-term debt ratio, long-term debt ratio and total debt ratio where firm performance is measured by return on assets (ROA) of Dhaka Stock Exchange (DSE) listed 39 family firms and 39 non-family firms. Based on a paired match sample selection procedure, 390 firm-years covering the period of 2013 to 2017 are used as the final sample of this study. By extrapolating from the Pooled Ordinary Least Square (OLS) regressions results, it is found that leverage ratios are significantly and negatively associated with the firm’s profitability. It is also found that family firms are highly influenced by debt financing than non-family firms. Finally, this study disagrees with the trade-off theory but agrees with the pecking order theory that profitable firms depend more on equity than debt as their key financing option in Bangladesh.
Contribution/ Originality
This study contributes to the existing literature by identifying to what extent – and if – the firm performance of Bangladeshi listed family and non-family firms are influenced by capital structure between 2013 and 2017.


Capital structure, Family, Non-family firms, Long-term debt, Return on assets, Short-term debt.


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This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.


All authors contributed equally to the conception and design of the study.

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