Capital Structure and Firm Performance; Evidence from Palestine Stock Exchange

his study is to investigate the impact of capital structure on firm performance. The study use fifth performance measures (including return on equity, return on assets, earning per share, market value of equity to the book value of equity and Tobin's Q) as dependent variable and four capital structure measures (including short –term debt, long-term debt and total debt to total assets, and total debt to total equity) as independent variable. The investigation is performed using panel data procedure for a sample of 28 listed companies the Palestinian Stock Exchange (PSE) over the period of 2006-2010.The results showed that firm's capital structure had a positive impact on the firm's performance measures, in both the accounting and market's measures, and statistically significant with TDTA except MBVR was significant with TDTA and with SDTA. Finally, the study findings suggest equations to determine the impact of the various debts on the firm performance.