Business, Management and Accounting
5 years ago

Debt-heavy firms in Bangladesh face financial performance struggles, study finds.

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Business and Economic Research
Debt Financing and Firm Performance: Evidence from an Emerging South-Asian Country
Mohammad Mazibar Rahman, Umme Khadija Kakuli, S. M. Riha Parvin, Ayrin Sultana

Paper Summary

The study looked at how a company's choice of borrowing money affects its performance in Bangladesh. They used data from non-financial companies listed on the Dhaka Stock Exchange from 2010 to 2015. The results showed that having a lot of long-term debt or total debt can hurt a company's financial performance, but short-term debt doesn't have the same effect. Also, having more short-term debt or total debt can lower a company's gross margin, but long-term debt doesn't have the same impact. Overall, the study suggests that how a company borrows money can negatively affect its financial performance in Bangladesh.

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