Raheman, Zulfiqar and Mustafa, (2007) conducted research on 94 non final companies

listed on the Islamabad Stock Exchange (ISE) and used data from 1999 to
2004. Pearson’s correlation and regression analysis to find relationship between
capital structure and firm Profitability were used and after analyzing financial
statements of companies it is proved that capital structure does impact firm profitability.
After studying 400 companies from 12 sectors and listed on the Tehran Stock
Exchange (TSE), Pouraghajan, Malekian, Emamgholipour, Lotfollahpour and Bagheri
(2012) found that there is a significant relationship between capitals Structure and firm
performance. Nirajini and Priya (2013) used data of trading companies listed in Sri
Lanka from year 2006 to 2010 and used correlation and multiple regression analysis
and found that there is a significant relationship between capital structure and firm
performance.

Dilrukshi yapa Abywardhana conducted research on 2016 his study examined the
impact of capital structure on firm performance of manufacturing sector SMEs in UK for
the period of 1998-2008. The authors hypothesize that there is a negative relationship
between capital structure and firm performance. To examine the association, the
authors run a Pearson correlation and multiple regression analysis. Results of this study
reveals that there is a significant negative relationship between leverage and firm
performance (ROA, ROCE), strong negative relationship between liquidity and firm
performance and highly significant positive relationship between size and the firm
performance. This study concluded that firms which perform well do not rely on debt
capital and they finance their operations from retained earnings and specially SMEs
have less access to external finance and face difficulties in borrowing funds. It is
recommended that firm should establish the point at which the weighted average cost of
capital is minimized and to maintain the optimal capital structure and thereby maximize
the shareholders wealth.

Another study examines by the Ajayi oziomobo according to his study the capital
structure and firm performance evidence from Nigeria. The study employed a sample
size of 100 non-financial firms of listed Nigerian companies in the Nigerian Stock
Exchange (NSE) for a period of 2010 to 2014. The annual financial statements have
been examined using a panel data approach to analyses the empirical study. However,
Tobin’s Q and ROA are used as a proxy for the firm performance. It was found out
that assets turnover and, tangible have a positive and significant relationship.

Mykhailo Iavorskyi investigates relationship between the capital structure and firm performance
in 2013. The main hypothesis is that financial leverage positively affects firm activity through
disciplining managers, tax shield and signaling effects. Using the sample of 16.5 thousand
Ukrainian firms over 2001-2010 we found that relationship between the leverage and firm
performance is actually negative. Conclusions seem to be robust to various performance
measures and subsamples, as well as to alternative estimation methods. This result is not
consistent with the free-cash-flow or trade-off theories of capital structure. However, the validity
of the pecking-order theory is supported.