MccPowell Fombang, Gauda Maseko
Abstract
The relationship between capital structure and earnings per share of publicly traded financial companies on the Ghana Stock Exchange was investigated in this study. A sample of ten firms was included in the study from 2003 to 2023 due to inadequate data. Three ratios, the debt-to-equity ratio, the total debt ratio, and the long-term debt ratio were used to measure capital structure, and earnings per share, a proxy for financial performance were also used. The General Method of Moments (GMM) was employed in the study because it permits the inclusion of the independent variables’ lag values as explanatory variables. The results of the study showed that while the long-term debt ratio and the total debt ratio had statistically significant positive relationships with firm performance (as measured by earnings per share), the debt-to-equity ratio had a statistically significant negative relationship. Therefore, in order to maximize shareholder wealth, financial firms should take into account, maintain, and optimize their capital structure.