An Empirical Investigation into the Impact of Capital Structure Decisions on Firm Performance and Shareholder Wealth Maximization in Emerging Economies

Abstract This study examines the impact of capital structure decisions on firm performance and shareholder wealth maximization in emerging economies. The research investigates whether leverage (debt-equity ratio) significantly influences profitability, market valuation, and shareholder returns. Using panel data from listed companies in emerging markets over a 10year period, the study applies regression and panel data techniques to analyze the relationship between capital structure variables and performance indicators such as Return on Assets (ROA), Return on Equity (ROE), Earnings per Share (EPS), and Tobin’s Q. The findings aim to contribute to the ongoing debate between traditional and modern capital structure theories and provide policy implications for corporate financial decision-making.