Abstract:
Capital structure of the organization is of much importance. Decisions pertaining to
capital structure are considered as important as for the growth of any firm. They believe
that the capital structure mix i-e Debt and Equity, as a source of fund has an impact on
firm performance, by performance means the overall value of the firm. This research is
conducted to check whether the capital structure has an impact on firm value, as firm
value could not be determined by single indicator, so to verify the impact different
determinants were used like Return on Equity, Size of the Firm, Profitability Margin,
Tangibility, Growth, Liquidity, and Market price per share. Different hypothesizes have
made to check whether capital structure has impact on these determinants. Different
analysis techniques have used to determine the relationship. Following tests are applied
on Eviews to check the relationship and test the hypothesis, like Descriptive analysis,
Covariance analysis, and cross sectional time series regression model. This study reveals
that capital structure has an impact on firm value, because three of the determinants have
an impact due to change in capital structure.
