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In another hand, increasing the debt to equity ratio would assist firms to make sure that managers are running the firm more efficiently .Literature review Since Modigliani and Miller's theory has been published many of the researchers are still studying the relationship between capital structure and firm performance, some of them found that there is a negative relation between capital structure and firm performance, while others found a positive relation between capital structure and firm performance.Badar and Saeed study showed the impact of using leverage in firm’s capital structure on firm’s performance .
the annual financial statements of 136 industrial companies listed on Istanbul Stock Exchange (ISE) were used for this study which covers a period of 8 years from 2005-20012.
In this case, the managers whom are responsible of guiding the firm toward to achieve them personal goals rather than maximizing benefits to the shareholders.
Hence, the main conflict that shareholders face is to ensure that managers (agents) do not invest the free cash flow in unprofitable projects.
In another hand many papers referred to a significant relation between structure and firm performance, while some of them referred to an insignificant relation between structure and firm performance.
In this study we will browse the newest published papers in this aspect, because its will be closer to reality, in addition these papers applied in an emerging markets which have similar characteristics with Turkish market.