Author(s): N. Narsaiah
India is one of the emerging markets among the global market, then it requires appropriate administration of capital structure. The paper investigates the impact of capital structure on financial performance of listed on Bombay Stock Exchange (BSE) 100 of Indian manufacturing companies over the research period 2014-19. The study applied econometric models for panel data analysis and used pooled OLS estimation, Fixed effect, and Random effect Methodology along with the Hausman test and Ramsey RESET. This research investigated the company’s performance by four accounting measures namely: Return on Equity (ROE), Return on Assets (ROA), Earnings per share (EPS) and Tobin’s Q. This research explores the relationship either optimistic or pessimistic amongst capital structure and the financial performance. Employed Pearson’s correlation and regression techniques, notified that there is a negative relationship amongst STDR, LTDR and ROE. Moreover, research investigated a significant negative relationship amongst capital structure variables as LTDR, TDR with the financial performance measured by ROA, EPS, and Tobin’s Q. However, the results revealed that long term debts and total debts decrease the financial performance, while short term debts facilitate to increase the financial performance.