CAPITAL STRUCTURE AND THE VALUE OF THE FIRM OF SELECTED DEPOSIT MONEY BANKS IN EAST AFRICAN COMMUNITY (EAC)

Authors: Balinda Steven & Karekezi Jean Claude

The study entitled capital structure and the value of the firm of selected Deposit Money Banks in East African Community (EAC) was guided by the following research question: What is the effect of capital structure on return on assets in selected deposit money banks in EAC? The study employed panel data analysis in order to examine the effect of capital structure on the value of the firm in selected Deposit Money Banks in EAC while Hausman test was adopted to determine the appropriate model between fixed effects and random effects. The study used data spanning from 2011-2020; a period of 10 years to analyze the firm value of indigenous deposit money banks in East African Community. The findings showed that capital structure influences return on assets at 15.2% as revealed by the results of Adjusted R-squared of 0.152. The results also showed that F-statistic was 0.032922<0.05; this implied that capital structure influences return on assets. The study concluded that capital structure affects return on assets in selected deposit money banks in EAC.

Keywords: Capital structure, debt ratio, leverage, tangibility, return on asset

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