Journal Press India^®

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This study intends to empirically test the relationship between the capital structure variables and financial performance. For the purpose of this, we have selected top 5 out of 118 Pharmaceutical companies listed on the Bombay Stock Exchange (BSE) based on their market capitalization as on April 18, 2019. We have used panel data regression analysis, where, ROCE has been considered as dependent variable. LTD to TA and STD to TA have been used as independent variables. Log of total assets (firm size) and rate of growth in fixed assets (growth) have been used as control variables. Data has been collected for the period from 2003-04 to 2017-18 from Capitaline Database. The result of FEM shows that both LTD to TA and firm size have statistically significant negative impact on the financial performance of the pharmaceutical industry. Growth has a positive impact but that is statistically insignificant.

Keywords

Capital structure; Financial performance; Pharmaceutical industry; Fixed effects model (FEM)

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