Effect of Capital Structure on Firm Performance: Evidence from Ethiopian Farmers Coffee Cooperatives
Abstract views: 85
/ 
PDF downloads: 125
DOI:
https://doi.org/10.59022/ijmf.123Keywords:
Return on Asset, Return on Equity, Fixed Effect Model, Random Effect Model, Capital StructureAbstract
This paper examined the empirical relationship between capital structure and firm performance using balanced panel data of nine primary farmers coffee cooperatives in Guji zone, Oromia regional state during 2020-2023. The profitability measured by return on asset indicated that short term debt to asset has positively significant relationship; total debt to equity has insignificant relationship, total debt to asset & total equity to asset have positively significant relationship with return on asset. The control variables Size & Asset tangibility has insignificant relationship, Asset utilization efficiency (current asset turnover has insignificant relationship, fixed asset turnover has positively significant relationship, total asset turnover has insignificant relationship)& liquidity have insignificant relationship with return on asset. Likewise, the profitability measured by return on equity showed that short term debt to asset has insignificant relationship, total debt to equity has negatively significant relationship.
References
Akinleye, G. T., & Olufemi Dadepo, A. (2019). Assets Utilization and Performance of Manufacturing Firms in Nigeria. International Journal of Business and Management, 14(4), 107. https://doi.org/10.5539/ijbm.v14n4p107
Al Ani, M. K. (2014). Effects of Assets Structure on the Financial Performance: Evidence From Sultanate of Oman. Journal of US-China Public Administration, 11(2), 170–179. Retrieved from https://www.researchgate.net/publication/278019169%0AEffects
Almanaseer, S. R. (2019). Determinants of Capital Structure: Evidence from Jordan. Accounting and Finance Research, 8(4), 186. https://doi.org/10.5430/afr.v8n4p186
Aulia, H., & Gandakusuma, I. (2020). The Effect Of Capital Structure On Firm Performance Of Manufacturing Companies In ASEAN 5 Country. 144(Afbe 2019), 473–477.
Ayalew, Z. A. (2021). Capital structure and profitability : Panel data evidence of private banks in Ethiopia Capital structure and profitability : Panel data evidence of private banks in Ethiopia. Cogent Economics & Finance, 9(1). https://doi.org/10.1080/23322039.2021.1953736
Baum, C. F. (2011). Introduction to Stata Overview of the Stata environment. (August).
Brigham and Ehrhardt(2008). (n.d.). Financial management practice and theory (Vol. 148).
Cevheroglu-acar, M. G. (2018). Determinants of Capital Structure : Empirical Evidence from Turkey. 8(1), 31–45. https://doi.org/10.5539/jms.v8n1p31
Dattalo(2008). (n.d.). Determing Sample Size Balancing Power,Percision and Practicality.ancial
Doan, T. T. T. (2020). Financing decision and firm performance: Evidence from an emerging country. Management Science Letters, 10(4), 849–854. https://doi.org/10.5267/j.msl.2019.10.012
Durrah, O., Rahman, A. A. A., Jamil, S. A., & Ghafeer, N. A. (2016). Exploring the relationship between liquidity ratios and indicators of financial performance: An analytical study on food industrial companies listed in Amman Bursa. International Journal of Economics and Financial Issues, 6(2), 435–441.
Ejike, S. I., & Nike, A. (2020). Impact of Financial Leverage On Company's Peformance In The Multidisciplinary. (March). https://doi.org/10.36713/epra20
Ghosh, A., Cai, F., & Fosberg, R. H. (2017). Capital structure and firm performance. Capital Structure and Firm Performance, (January), 1–131. https://doi.org/10.4324/9781315081793
Hair, Black, B. and A. (n.d.). Multivariate Data Analysis (7th Edition) ( PDFDrive ).pdf.
Hausman(1978). (2016). specification test in econometrics. Https://Medium.Com/, 46(6), 1251–1271. Retrieved from https://medium.com/@arifwicaksanaa/pengertian-use-case-a7e576e1b6bf
Hossain, S., Naser, A., & Saif, M. (2019). Impact of Firm Size on Financial Performance of Banking Companies in Bangladesh Annals of Emerging Technologies in Computing (AETiC) View project New one View project. Journal of Banking & FInancial Service, 2021(December 2019). Retrieved from https://www.researchgate.net/publication/343390858
Hung, C. V., Vinh, T. P., & Thai, B. D. (2021). “The impact of firm size on the performance of Vietnamese private enterprises: A case study.” Problems and Perspectives in Management, 19(2), 243–250. https://doi.org/10.21511/ppm.19(2).2021.20
İltas, Y., & Demirgunes, K. (2020). Asset Tangibility and Financial Performance: A Time Series Evidence. Ahi Evran Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 6(2), 345–364. https://doi.org/10.31592/aeusbed.731079
Kothari(1990). (1384). Research Methodology Methods and Techniques.
Liargovas, P. G., & Skandalis, K. S. (2012). The impact of leverage and other key variables on business performance: evidence from Greece. International Journal of Economics and Business Research, 4(4), 472. https://doi.org/10.1504/ijebr.2012.047423
Luqman, O. (2017). The effect of firm size on performance of firms in Nigeria. (January). https://doi.org/10.5605/IEB.15.4
Madushanka, K. H. I., & Jathurika, M. (2018). "The Impact of Liquidity Ratios on Profitability (With special reference to Listed Manufacturing Companies in Sri The Impact of Liquidity Ratios on Profitability (With special reference to Listed Manufacturing Companies in Sri Lanka). International Research Journal of Advanced Engineering and Science, 3(4), 157–161.
Mardones, J. G., & Cuneo, G. R. (2020). Capital structure and performance in Latin American companies. Economic Research-Ekonomska Istrazivanja , 33(1), 2171–2188.https://doi.org/10.1080/1331677X.2019.1697720
Masuku, T. A. (2016). Performance of Multipurpose Coorperatives In the Shiselweni Region Of SwazilandContributionOriginality.3(4),58–71https://doi.org/10.18488/journal.70/2016.3.4/70.4.58.
Mateos-Ronco, A., & Guzmán-Asunción, S. (2018). Determinants of financing decisions and management implications: Evidence from Spanish agricultural cooperatives. International Food and Agribusiness Management Review, 21(6), 701–721. https://doi.org/10.22434/IFAMR2016.0178
Meskela, T., & Teshome, Y. (2014). From Economic Vulnerability to Sustainable Livelihoods : The Case of the Oromia Coffee Farmers Cooperatives Union ( OCFCU ) in Ethiopia Company Background and Early Challenges. 17, 103–108.
Modiglian Miller, M. H. (1958). (2009). The American economic. 48(3), 261–297.
Modigliani and Miller (1963). (n.d.). Corporate income taxes and the cost of capital : a correction.
Myers, S. C., & Majluf, N. S. (1983). September 1981 Latest Revision December 1983. (December).
Nassar, S. (2016). The Impact of Capital Structure on Financial Performance of the Firms : Business & Financial Affairs The impact of capital structur Evidence From Borsa Istanbul. (February). https://doi.org/10.4172/2167-0234.100017
Nyabakora, W. (2021). The Effect of Financing Decision on Firm Performance ( A Case of Tanzania ) The Effect of Financing Decision on Firm Performance ( A Case of Tanzania ). (May 2020). https://doi.org/10.7176/JAAS/60-06
Omoregie, O. K., Olofin, S. A., & Ikpesu, F. (2019). Capital Structure and the Profitability-Liquidity Trade-Off. International Journal of Economics and Financial Issues, 9(3), 105–115. https://doi.org/10.32479/ijefi.7758
Sakr, A., & Bedeir, A. (2019). Firm level determinants of capital structure: Evidence from Egypt. International Journal of Financial Research, 10(1), 68–87. https://doi.org/10.5430/ijfr.v10n1p68
Saleh, M. M. A., Jaradat, M. M., Wedyan, L. M., & Saleh, H. M. I. (2021). The Impact of Liquidity and Leverage on Profitability in Industrial Sector in Jordan. Research in World Economy, 12(1), 394. https://doi.org/10.5430/rwe.v12n1p394
Samuels, P. (2015). ןוסריפ םאתמ Pearson Correlation ? םאתמ והמ. (April 2014), 1–5. Retrieved from https://www.researchgate.net/publication/274635640
Shaikh, M. (2017). Impact of Financing Decissions on Firm's Performance : An Emprical Study of Pakistan Listed Firm ’ S In KSE ImtiazZahid. (April), 3050–3056.
Tabachnick, B. G., & Fidell, L. S. (2017). Using Multivariate Statistics ليس المستحدم كمرجع. In Journal of Applied Psychology (Vol. 87). Retrieved from https://www.vlebooks.com/Vleweb/Product/Index/437320?page=0
Taqi, M., Khan, R., & Anwar, I. (2020). Financial Leverage and Profitability: Evidence from Oil and Gas Sector of India. 15(4), 665–687.
Thanh, L. T., & Huong, D. M. (2017). Determinants of capital structure: An empirical study on Vietnamese listed firms. Serbian Journal of Management, 12(1), 77–92. https://doi.org/10.5937/sjm12-10187
Torres-Reyna, O. (n.d.). Topic : Introduction to Panel Data Analysis Introduction to Panel Data Analysis.
Umer, U. M. (2013). Determinants of Capital Structure: Empirical Evidence from Large Taxpayer Share Companies in Ethiopia. International Journal of Economics and Finance, 6(1). https://doi.org/10.5539/ijef.v6n1p53
Vuong, N. B., Quynh Vu, T. T., & Mitra, P. (2017). Impact of Capital Structure on Firm’s Financial Performance: Evidence from United Kingdom. Journal of Finance & Economics Research, 2(1), 18–32. https://doi.org/10.20547/jfer1702102
Wand, Y., & Weber, R. (2002). Research Commentary : Information Systems and Conceptual Modeling — A Research Agenda. 13(4), 363–376.
Yameen, M., Farhan, N. H. S., & Tabash, M. I. (2019). The impact of liquidity on firms’ performance: Empirical investigation from Indian pharmaceutical companies. Academic Journal of Interdisciplinary Studies, 8(3), 212–220. https://doi.org/10.36941/ajis-2019-0019
Kant S., Belay B., & Dabaso A.. (2022). Coffee Logistics Operation Knowledge Effect on Cooperative Associations Functionalism in Ethiopia with Mediation of Cybernetics and Local People Knowledge Base. Journal of Production, Operations Management and Economics(JPOME) ISSN 2799-1008, 3(01), 21–33. https://doi.org/10.55529/jpome.31.21.33
Kant, S. (2020). A Comparative Analysis of Entrepreneurial Growth Expectations between India and Ethiopia. European Journal of Business and Management. 12 (24), 21-16, DOI: 10.7176/EJBM/12-24-04
Kant, S., Adula, M.(2022). Promotion Mix Elements and Customer Buying Behavior in Education Sector of Ethiopia. European Journal of Business and Management, 14 (21); DOI: 10.7176/EJBM/14-21-03
Kant, S., Adula, M., Yadete, F. D., & Asefa, K. (2023). Entrepreneurial Innovation Mediating among Marketing Strategies and Venture Sustainability in Ethiopia’s. International Journal of Entrepreneurship, Business and Creative Economy, 3(2), 92–107. https://doi.org/10.31098/ijebce.v3i2.1062
Kant, S., Dejene F., & Garuma G. (2023). Is Marketing Strategies and Business Sustainability are mediated through Entrepreneurial Innovation in Ethiopia? . Journal of Social Sciences and Management Studies, 2(2), 13–22. https://doi.org/10.56556/jssms.v2i2.489
Kant, S., Zegeye, Z., & Tesfaye, T. (2022). Coffee Supply Operation Management Consequences on Cooperative Societies Functionalism in Ethiopia. Logistic and Operation Management Research (LOMR), 1(2), 40–51. https://doi.org/10.31098/lomr.v1i2.1056
Kebede K., Yadete F.D., & Shashi Kant. (2023). Is Paradigm Shift from Traditional Marketing Mix to Digital Marketing Mix Effects the Organizational Profitability in Ethiopia? A Multivariate Analysis. Partners Universal International Research Journal, 2(1), 122–134. https://doi.org/10.5281/zenodo.7772438
Negeri, D. D. ., Wakjira, G. G. ., & Kant, S. . (2023). Is Strategic Leadership having a mediating role in Ethiopia’s SMEs sector when it comes to Entrepreneurial Skill and Motivation? A Multivariate Investigation. IRASD Journal of Management, 5(2), 74–86. https://doi.org/10.52131/jom.2023.0502.0108
Negeri, D. D. ., Wakjira, G. G. ., & Kant, S. . (2023). Is Strategic Leadership having a mediating role in Ethiopia’s SMEs sector when it comes to Entrepreneurial Skill and Motivation? A Multivariate Investigation. IRASD Journal of Management, 5(2), 74–86. https://doi.org/10.52131/jom.2023.0502.0108
Panigrahi, A. K. Nayak, R. Paul, B. Sahu and S. Kant, "CTB-PKI: Clustering and Trust Enabled Blockchain Based PKI System for Efficient Communication in P2P Network," in IEEE Access, vol. 10, pp. 124277-124290, 2022, doi: 10.1109/ACCESS.2022.3222807.
Shiferaw, Y., & Kant, S. (2023). Effect of Coffee Supply Organizational Culture on the Structuralism of Cooperative Societies in Ethiopia. Logistic and Operation Management Research (LOMR), 2(1), 14–24. https://doi.org/10.31098/lomr.v2i1.1203
Tufa G, & Kant S. (2023). Introductory Qualitative Research in Psychology by Carla Willig: A Book Review. Partners Universal International Innovation Journal, 1(2), 49–54. https://doi.org/10.5281/zenodo.7853394
Tufa G. & Kant, S. (2023). Human Resource Management Practices: Assessing Value Added: Book Review. Journal of Social Sciences and Management Studies, 2(1), 23–27. https://doi.org/10.56556/jssms.v2i1.450
Tufa G., & Kant S. (2023). Human Resource Management Practices: Assessing Added Value: A Book Review. Partners Universal International Research Journal, 2(1), 135–142. https://doi.org/10.5281/zenodo.7775351
