Contact Us

For Marketing, Sales and Subscriptions Inquiries
Rockefeller Center, 45 Rockefeller Plaza
20th Flr Unit #5, New York, NY 10111
United States

Conference List

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

Share :

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.


Abdellatif, M., Amann, B., & Jaussaud, J. (2010). Family versus nonfamily business: A comparison of international strategies. Journal of Family Business Strategy, 1(2), 108-116.Available at:

Abor, J. (2005). The effect of capital structure on profitability: An empirical analysis of listed firms in Ghana. Journal of Risk Finance, 6(5), 438-445.

Ahmad, N., & Rahim, F. A. (2013). Theoretical investigation on determinants on government-linked companies capital structure. Paper presented at the Proceedings of 3rd Asia-Pacific Business Research Conference, Kuala Lumpur.

Amin, S., & Jamil, T. (2015). Capital structure and firm performance: Evidence from cement sector of Dhaka stock exchange limited. Journal of Finance and Banking, 13(1), 29-42.Available at:

Amran, N. A., & Ahmad, A. C. (2011). Board mechanisms and Malaysian family companies’ performance. Asian Journal of Accounting and Governance, 2(1), 15-26.Available at:

Anderson, R. C., & Reeb, D. M. (2003). Founding-family ownership and firm performance: Evidence from the S&P 500. The Journal of Finance, 58(3), 1301-1328.Available at:

Anderson., R. C., & Reeb, D. M. (2004). Board composition: Balancing family influence in S&P 500 firms. Administrative science quarterly, 49(2), 209-237.

Azhagaiah, R., & Gavoury, C. (2011). The impact of capital structure on profitability with special reference to IT industry in India. Managing Global Transitions: International Research Journal, 9(4), 371-392.Available at:

Chowdhury, A., & Chowdhury, S. P. (2010). Impact of capital structure on firm's value: Evidence from Bangladesh. Business and Economic Horizons, 3(3), 111-122.

Demsetz, H., & Lehn, K. (1985). The structure of corporate ownership: Causes and consequences. Journal of Political Economy, 93(6), 1155-1177.Available at:

Gill, A., Biger, N., & Mathur, N. (2011). The effect of capital structure on profitability: Evidence from the United States. International Journal of Management, 28(4), 3-15.

Gill, A., Biger, N., Pai, C., & Bhutani, S. (2009). The determinants of capital structure in the service industry: Evidence from United States. The Open Business Journal, 2(1), 48-53.Available at:

Gill, A., & Mathur, N. (2011). Factors that influence financial leverage of Canadian firms. Journal of Applied Finance and Banking, 1(2), 19-37.

Gitman, J., & Zutter, C. J. (2010). Principles of managerial finance (13th ed.). New York: Prentice Hall.

Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (2006). Multivariate data analysis (6th ed.). New Jersey: Pearson, Prentice Hall.

Hamid, M. A., Abdullah, A., & Kamaruzzaman, N. A. (2015). Capital structure and profitability in family and non-family firms: Malaysian evidence. Procedia Economics and Finance, 31, 44-55.Available at:

Hasan, M. B., Ahsan, A. M., Rahaman, M. A., & Alam, M. N. (2014). Influence of capital structure on firm performance: Evidence from Bangladesh. International Journal of Business and Management, 9(5), 184-194.

Jorissen, A., Laveren, E., Martens, R., & Reheul, A. M. (2002). Differences between family and non-family firms: The impact of different research samples with increasing elimination of demographic sample differences. Paper presented at the Conference Proceedings. Barcelona, Spain: Univeristat Autonoma de Barcelona.

Khan, N., & Siddiqua, P. (2015). The impact of family ownership on firm value and corporate governance: Evidence from the financial sector of Bangladesh. Journal of Business Studies, 36(3), 83-101.

Meah, M. R. (2019). The efficiency of corporate governance on capital structure: An empirical study from listed manufacturing firms in Bangladesh. Asian Journal of Accounting and Governance, 11(1), 13-23.

Meah., M. R., & Chaudhory, N. U. (2019). Corporate governance and firm’s profitability: An emerging economy-based investigation. Indian Journal of Corporate Governance, 12(1), 71-93.Available at:

Mehran, H. (1995). Executive compensation structure, ownership, and firm performance. Journal of Financial Economics, 38(2), 163-184.Available at:

Miller, M. H. (1977). Debt and taxes. The Journal of Finance, 32(2), 261-275.

Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporate finance and the theory of investment. American Economic Review, 48, 261-297.

Modigliani., F., & Miller, M. H. (1963). Corporate income taxes and the cost of capital: A correlation. American Economic Review, 53, 443-453.

Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information the investors do not have. Journal of Financial Economics, 13, 187-221.

Nadaraja, P., Zulkafli, A. H., & Masron, T. A. (2011). Family ownership, firm’s financial characteristics and capital structure: Evidence from public listed companies in Malaysia. Economia Seria Management, 14(1), 141-155.

Rahman, M. M., Meah, M. R., & Chaudhory, N. U. (2019). The impact of audit characteristics on firm performance: An empirical study from an emerging economy. The Journal of Asian Finance, Economics and Business (JAFEB), 6(1), 59-69.

Rouf, D. (2015). Capital structure and firm performance of listed non-financial companies in Bangladesh. The International Journal of Applied Economics and Finance, 9(1), 25-32.Available at:

Seifert, B., & Gonenc, H. (2008). The international evidence on the pecking order hypothesis. Journal of Multinational Financial Management, 18(3), 244-260.Available at:

Shubita, M. F., & Alsawalhah, J. M. (2012). The relationship between capital structure and profitability. International Journal of Business and Social Science, 3(16), 104-112.

Shyu, J. (2011). Family ownership and firm performance: Evidence from Taiwanese firms. International Journal of Managerial Finance, 7(4), 397-411.

Ting, I. W., & Lean, H. H. (2011). Capital structure of government-linked companies in Malaysia. Asian Academy of Management Journal of Accounting and Finance, 7(2), 137-156.

White, H. (1980). A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica, 817-838(4), 817-838.


Google Scholor ideas Microsoft Academic Search bing Google Scholor


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.

Related Article

( 1 ) Impact of Labour, Capital and Human Resources in Productivity of Transport Firms in Nigeria
( 2 ) The Impact of Human Capital on Economic Growth: Evidence from Tunisia Using Star and Stecm Models
( 3 ) Explaining Psychological Capital Components through Organization’s Ethical Climate Components
( 4 ) Rice Farmer and Capital Formation: A Case Study of Rice Farmer's Credit Cooperative in Itoikin, Ikosi-Ejirin LCDA, Lagos State
( 5 ) Under-Utilization of Female Capital: A Quantitative Study in Pakistani Perspective
( 6 ) Macroeconomic Indicators and Capital Formation Growth in Nigeria: A New Evidence
( 7 ) Foreign Capital Inflows and Unemployment in Nigeria: A New Evidence from ARDL-Bounds Testing Approach
( 8 ) Disaggregated Foreign Capital Inflows and Economic Growth in a Developing Economy: Empirical Evidence from Nigeria
( 9 ) Industrialization and Economic Growth in Sub-Saharan Africa: The Role of Human Capital in Structural Transformation
( 10 ) Decision-Making on Working Capital Management, Based on Industry Differences
( 11 ) Foreign Direct Investment in Zimbabwe: The Role of Uncertainty, Exports, Cost of Capital, Corruption and Market Size
( 12 ) Factors Influencing Human Capital in Ready Made Garments Industry in Bangladesh
( 13 ) Africa's Human Capital Development: Is Public Finance Management an Effective Strategy?
( 14 ) Analysis of Effect of Profitability, Capital, Risk Financing, the Sharia Supervisory Board and Capabilities Zakat in Islamic Perspective with Circular Approach Causastion on Islamic Banks in Indonesia
( 15 ) Incidence of Short Term Private Capital Outflow: Empirical Analysis in Nigeria
( 16 ) Re-Engineering Nigerian Economy through Human Capital Development: A Case of Manufacturing Firms In Southern Part of Nigeria
( 17 ) Intellectual Property Rights, Human Capital and Innovation in Emerging and Developing Countries
( 18 ) Does Capital Structure Affect the Profitability of Listed Family and Non-Family Firms? Evidence from Bangladesh
( 19 ) Effect of Savings Deposit Rate on Stock Market Capitalization in Nigeria: An Empirical Investigation
( 20 ) Factors Affecting the Capital Structure of the Textile Industry in Bangladesh: An Inferential Study
( 21 ) The Effect of Capital Structure Decisions on Profitability of Quoted Consumer Goods in Nigeria
( 22 ) Human Capital and Economic Growth in Latin America: A Cointegration and Causality Analysis
( 23 ) Human Capital Development and Economic Growth in Nigeria: An Autoregressive Distributed Lag (ARDL) Approach
( 24 ) The Role of Social Capital and Social Innovation in Economic Growth
( 25 ) Analysis of Factors Affecting Capital Structure and the Impact on LQ-45 Share Price in 2015-2018
( 26 ) Inflationary Rate in Nigeria: Impact of Foreign Capital Inflows
( 27 ) A Review on Criteria for Green Infrastructure to be Adopted by Local Authorities
( 28 ) Public Infrastructure Spending and Economic Growth in Nigeria: An Error Correction Mechanism (ECM) Approach
( 29 ) Conceptual Framework of Green Infrastructure Performance Evaluation for Local Authority
( 30 ) A Multidimensional Structure of Shopping Centre Visit Objectives - An European Consumers Perspective
( 31 ) Milk or Wine: Are Critical Infrastructure Protection Architectures Improving with Age?
( 32 ) The Indirect Impact of Overconfidence on the Performance of Tunisian Firms Through their Financing Structure
( 33 ) Interfaces Between Road Infrastructure and Poverty in Africa: The Case of Malawi, 1994-2013
( 34 ) Rural Roads Infrastructure and Agricultural Products Distribution: A Focus on Akure South Local Government Area, Ondo State, Nigeria
( 35 ) An Investigation into the Causes of Failures in Railway Infrastructure at Transnet Freight Rail - A Case of the Steel and Cement Business Unit
( 36 ) An Investigation of the Impact of Organisational Structure on Organisational Performance
( 37 ) Study on the Effect of Foreign Investment on Anhuis Industrial Structure Optimization
( 40 ) Infrastructure Development, Capacity Utilization and Manufacturing Value Added in Nigeria
( 43 ) A Study of Transnational and Transformation Leadership Styles and Factors Affect The Leadership Style
( 44 ) Does Managerial Emotional Biases Affect Debt Maturity Preference? Bayesian Network Method: Evidence from Tunisia
( 45 ) A Factor Analysis Approach Towards a Study of the Factors Affecting Students’ Choice of Higher Education Institution: A Case Study of a Private Institution (Twintech International University College of Technology)
( 46 ) Analyzing Factors Affecting the Success of Social Media Posts for B2b Networks: A Fractional-Factorial Design Approach
( 47 ) Analysis of Environmental Factors Affecting Manufacturing Small and Medium-Size Enterprises in Kogi State Nigeria
( 48 ) Does External Borrowing Affect Economic Growth? A Revisit of the Age-Long Debate for Nigeria
( 49 ) Factors Affecting the Individual Stock Price Index (IHSI) Industrial Manufacturing Sector in Indonesia, Automotive Sub Sectors, and Components in Indonesia Stock Exchange (IDX)
( 52 ) Factors Affecting Profitability of General Insurance Companies in Indonesia
( 54 ) The Effect of Selected Financial Ratios on Profitability: An Empirical Analysis of Listed Firms of Cement Sector in Saudi Arabia
( 55 ) Market Share and Profitability Relationship: A Study of the Banking Sector in Nigeria
( 56 ) The Profitability of Momentum Strategies: Empirical Evidence from Damascus Securities Exchange (DSE)
( 57 ) The Effect of Internal and External Factors of Companies on Profitability and its Implications on Stock Price Index of State-Owned Banks
( 58 ) Profitability of Commercial Bank on Interest Rate Deregulation
( 59 ) Factors that Influence Profitability of General Insurance Issuers in Indonesia
( 60 ) Determinants of Banks Profitability & Liquidity and the Role of BASEL III in Islamic & Conventional Banking Sector of Pakistan: A Case Study of NBP
( 61 ) Profitability Behavior of Plastic Industries in Indonesia
( 64 ) Determinants of Profitability and its Implications on Corporate Values (Studies at Ceramic, Porcelain and Glass Sub Sector Listed in Indonesia Stock Exchange, 2009 - 2018)
( 65 ) Testing the Validity of Gibrats Law in the Context of Profitability and Leverage
( 67 ) Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry
( 69 ) Factors Influencing Profitability of Commercial Banks in Tanzania: A Case Study of CRDB Bank Plc
( 70 ) The Relationship Between Market Share and Profitability of Ghanaian Banks
( 71 ) Importance of Corporate Governance Quality and Voluntary Disclosures of Corporate Governance Information in Listed Malaysian Family Controlled Businesses
( 73 ) Share Options, Share Award and Firm’s Performance: Evidence from Malaysian Public Listed Companies
( 76 ) The Impact of Merger and Acquisition on the Financial Performance of the Nasdaq Listed Small Size Technology Companies
( 77 ) A Study on Financial Performance of Transport & Warehouses Firms Listed on the Hanoi Stock Exchange
( 78 ) The Impact of Fundamental Factors on the Share Price of Micro-Sized Nasdaq Listed Technology Companies
( 80 ) Effects of Environmental Satisfaction on Family Displacement Case Study: Gohar Dasht Region, Karaj City
( 81 ) Family Leadership and Small to Medium Sized Enterprises Research and Development Investments
( 85 ) New Evidence on the Link Between Income Inequality and Misery Index: A Nonlinear Time Series Analysis
( 86 ) How Telecommunication Development Aids Economic Growth: Evidence from Itu Ict Development Index (IDI) Top Five Countries for African Region
( 88 ) The Nexus between Financial Crisis and Household Consumption: Evidence from Emerging Countries
( 89 ) Effective Tax Administration and Institutionalization of Accounting Systems in Small and Medium Scale Enterprises: Evidence from Nigeria
( 90 ) Moderating Effect of Demographics on Monetary Motivation and Employees Job Performance Relationship: Evidence from Malaysia
( 91 ) The Impact of Dividend Policy on Shareholders’ Wealth before and After Financial Melt down: Evidence from FMCG Sector in India
( 92 ) Stock Market Performance and Economic Growth: Evidence from Nigeria Employing Vector Error Correction Model Framework
( 94 ) Impact of Inflation on Per Capita Income in Emerging Economies: Evidence from BRICS Nations
( 96 ) Empirical Evidence on Municipal Tax Policy and Firm Growth
( 97 ) The Effect of Exchange Rate Changes on Consumer Prices in Nigeria: Evidence from VECM Model
( 98 ) Testing the PPP Using Unit Root Tests with Structural Breaks: Evidence from Politically Unstable Arab Countries
( 99 ) Dynamics of Inflation, Economic Growth, Money Supply and Exchange Rate in India: Evidence from Multivariate Analysis
( 100 ) Does the Holiday Effect Differ from Religious to Non-Religious Holidays? Empirical Evidence from Egypt
( 101 ) Financial Deepening, Interest Rate Spread and Economic Growth: New Evidence from Sub-Sahara Africa
( 102 ) What Drives Banking Stability? Empirical Evidence from ECOWAS Countries
( 104 ) An Investigation of the Relationship between Manufacturing Output and Economic Growth : Evidence from Nigerias Data Set
( 107 ) Forecasting Equity Index Volatility: Empirical Evidence from Japan, UK and USA Data
( 108 ) Intention to Use E-Recruitment System: Empirical Evidence from Jobseekers in the Advertising Industry in Malaysia
( 110 ) Exchange Rate and Foreign Reserves Interface: Empirical Evidence from Nigeria
( 111 ) External Debt and Economic Growth: Two-Step System GMM Evidence for Sub-Saharan Africa Countries
( 112 ) Impact of Network Finance Development on Inflation: Evidence from Chinese Market
( 113 ) The Relationship between Financial Development, Economic Growth, and Inflation: Evidence from Southeast Asia
( 114 ) Exchange Rate Pass-through to Prices: VAR Evidence for Albania
( 115 ) Externality Effects of Sachet and Plastic Bottled Water Consumption on the Environment: Evidence from Benin City and Okada in Nigeria
( 117 ) Analysis of Credit Ratings Determinants: Evidences in Brazilian and American States
( 118 ) The Impact of Social Media on Economic Growth: Empirical Evidence of Facebook, YouTube, Twitter and Pinterest
( 119 ) The Impact of Economic Growth, Oil Price, and Financial Globalization Uncertainty on Financial Development: Evidence from Selected Leading African Countries
( 120 ) Interest Rate Ceilings and Financial Exclusion in Kenya: Evidence from Commercial Banks’ Sectoral Credit Distribution
( 121 ) Non-Linear Effects of Intellectual Property Rights on Technological Innovation: Evidence from Emerging and Developing Countries
( 122 ) Effect of Tax Administration on Tax Revenue of States in African Countries: Evidence from Nigeria
( 124 ) Influence of Corporate Characteristics on Firm Leverage: Evidence from Bangladesh
( 125 ) Exploring the Linkages between Remittances, Economic Growth and Poverty: Empirical Evidence from Pakistan
( 126 ) The Reasons Behind the Shift of Patients from Public to Private Hospitals: Evidence from Public Hospitals in Cumilla City Corporation
( 127 ) Analyzing the Impact of Eco-Innovation on Carbon Emissions Abatement: Evidence from OECD Countries
( 128 ) Research on the Construction and Application of Chinese Enterprises Overseas Port Investment Confidence Index Based on D-S Evidence Theory
( 129 ) Decision Making of Charity Fund Allocation: Evidence from Hong Kong
( 130 ) Financial Development and Economic Growth in Nigeria: New Evidence from a Threshold Autoregressive and Asymmetric Analysis