Capital Structure and Firm Profitability in Developing Countries

Abstract

This research intended to investigate the influence of capital structure on private hospitals’ performance using a sample of 162 patients. The researchers used a quantitative approach to evaluate the impact of capital structure (Corporate governance, Ownership structure, and Constructive thought patterns) to measure the influence on sustained competitive advantage in private hospitals in North America. The research sample was chosen using a random sampling method and carried out in various locations in North America. A total of 175 questionnaires were issued, but only 162 participants completed them correctly. The results showed that the most effective relationship was between corporate governance as element of capital structure with firm performance, on the other hand the less effective relationship was between ownership as element of capital structure with firm performance. In addition, our results also suggest that the finance managers should use debts as last alternative in their capital structure. To the end, our study can be extended by incorporating more controlled variables, larger sample and longer period data in the regression models to get better results. Other measures and methodology can also be employed.