A STRUCTURED LITERATURE REVIEW OF CAPITAL STRUCTURE AND ITS IMPACT ON FINANCIAL PERFORMANCE

Abstract

 The literature on capital structure theory and its impact on different variables are abundantly available. Search for the term Capital Structure on Google Scholar shows more than 4.5 million results. However, the topic retains attraction for researchers. Regular development in the domain, like buyback of shares has kept the subject vibrant and open for debate. This article takes stock of recent research on the subject with a focus on the linkage between capital structure (CS) ie Debt/Equity and financial performance (FP) variables . The structured literature review shows interesting results. While there is consensus amongst researchers that CS impacts FP, there is a clear conflict about the direction of the impact. This article presents an analysis of 30 recent research works on the linkages between CS and FP.