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Item A Comparative Analysis of the Impact of Firm-Specific and Macroeconomic Factors on Capital Structure Decisions: Evidence from Sri Lankan Retail and Utility Sector.(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Kajanika, P.; Perera, L. A. S.Introduction: This study investigates the influence of firm-specific factors, such as profitability, firm size, asset tangibility, liquidity, and dividends, and macroeconomic factors, including GDP growth, inflation, interest rates, and exchange rates, on capital structure decisions within Sri Lankan utilities and retail companies. Spanning the period from 2013 to 2023, this research compares the distinct financial dynamics of these two sectors to provide insights into their capital structure choices and the factors influencing these decisions. Methodology: A quantitative approach was employed using secondary data from 21 companies—15 in the retail sector and 6 in the utilities sector—listed on the Colombo Stock Exchange (CSE). Capital structure was measured through leverage ratios, while profitability, size, tangibility, and macroeconomic indicators were analyzed. Panel data regression techniques were applied to assess the relationships between the independent variables and capital structure. Sectoral comparisons provided further insight into variations. Findings: The findings indicate significant differences between sectors. In the utility sector, higher tangibility of assets strongly correlates with increased debt usage, reflecting the capital-intensive nature of this industry. Conversely, retail firms exhibited a higher reliance on equity, likely driven by their need for financial flexibility amidst competitive market dynamics. Macroeconomic factors such as GDP growth and inflation had varying impacts, with inflation negatively affecting retail firms but offering a mild hedging benefit to utility firms. Interest rates showed a uniformly negative influence on debt usage across both sectors. Conclusion: This study highlights the critical role of both firm-specific and macroeconomic factors in shaping the capital structure decisions of Sri Lankan utilities and retail companies. Utilities, with their stable cash flows, favor debt, whereas retail firms prioritize flexibility due to market volatility. Policymakers and corporate managers can use these findings to tailor strategies for optimizing capital structures, mitigating risks, and enhancing financial resilience in their respective industries. The study concludes that firm-specific factors such as tangibility, firm size, and liquidity, along with the macroeconomic factor of interest rates, are the most influential determinants of capital structure. Utilities Sector: Tangibility and firm size are key drivers, reflecting the sector's reliance on debt financing for infrastructure development. Retail Sector: Liquidity and profitability are critical, underscoring the need for financial flexibility in a competitive market. Macroeconomic factors, especially interest rates and inflation, further shape these decisions by altering the cost and attractiveness of debt. Firms and policymakers should consider these findings to optimize capital structure strategies, enhance resilience to economic fluctuations, and support sustainable growth in their respective industries.Item A Comparative Analysis of the Impact of Firm-Specific and Macroeconomic Factors Influence Capital Structure Decisions: Evidence from Sri Lankan Manufacturing and Telecom Companies (2013-2023).(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Begum, M. H. S.; Perera, L. A. S.Introduction: Optimal capital structure is important for the sound financial and future growth of any enterprise. This study aims to examine the significant impact of firm specific variables namely profitability, size, tangibility, liquidity and dividend payout policies in combination with macroeconomic variables consisting of; GDP growth rate, interest rate, inflation and exchange rate on the Manufacturing and Telecom firms of CSE for the year 2013-2023. Methodology: The analysis was carried out using panel data regression on a sample of 22 firms, 2 telecom firms and 20 manufacturing firms employing the criteria of market capitalization. All samples were chosen based on available ratios to accomplish the measurement of capital structure using the debt-to-equity ratio, and validity tests were applied to assess the accuracy of the calculations. In addition, the sectoral and combined examinations was conducted to look for difference and difference patterns. Findings: From the findings of the study show that this study finding of this manufacturing sectors represent firm specific characteristics, which show that tangibility and liquidity of the manufacturing firms have significant effects on capital structure decision and that firms with high tangible and high liquid assets utilize least debts. The level of profitability has a strong inverse relationship with leverage and strong positive relationship with dividend and interest rate that may be due to telecommunication infrastructure financing requirements. In the combined sector analysis, tangibility and liquidity are used as the major indexes, and the indexes of macroeconomic environment, including interest rate, exchange rate, inflation, and GDP growth had not been concluded to exert major influence over both sectors. It was also revealed that simply due to these observations, Firm size, Growth, GDP growth, Exchange rate and inflation rates held insignificant impacts across both sectors. Conclusion: This study has shown that firm specific characteristics organizational liquidity tangibility, Dividend and Profitability significantly affect capital structure decisions in the Manufacturing and Telecom industry of Sri Lanka aside from influence by the macroeconomic indicators namely the interest rates. The overall model also shows significance at the 1% level for both the telecom and the manufacturing sectors. These insights vindicate the essentiality of industry-specific financing to give firms the ability to improve their solvency and performance.Item A Comparative Analysis of the Impact of Firm-Specific and Macroeconomic Factors on Capital Structure Decisions: Evidence from Sri Lankan Automobile and Consumer Goods Companies(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Kenusha, T.; Perera, L. A. S.Introduction: Capital structure decisions are fundamental to a firm's financial management, influencing its ability to optimize resources and mitigate risks. This study evaluates the impact of firm-specific factors - profitability, firm size, tangibility, liquidity, and dividend payout and macroeconomic factors, including GDP growth, interest rates, inflation, and exchange rates, on the capital structure of automobile and consumer goods companies listed on the Colombo Stock Exchange (CSE) between 2013 and 2023. Methodology: The analysis used panel data regression on a sample of 30 companies, consisting of five automobile firms and 25 consumer goods firms, selected based on market capitalization. The debt-to-equity ratio was utilized to measure capital structure, and rigorous diagnostic tests ensured the reliability of the results. Sectoral and combined analyses were conducted to identify distinct patterns and variations. Findings: The results indicate that firm-specific factors such as firm size and tangibility are significant in shaping capital structure decisions. Firm size positively influences capital structure in the automobile sector, while tangibility shows a marginally significant positive effect across sectors. Liquidity has a significant negative impact on capital structure in the consumer goods sector and across the combined sample. Among macroeconomic factors, interest rates exhibit a significant negative influence on capital structure in the consumer goods sector and combined analysis, while exchange rates show mixed effects, negatively impacting the automobile sector but positively influencing the consumer goods and combined sectors. Notably, profitability, dividend payout, GDP growth, and inflation rates were found to have no significant effect across all sectors. Conclusion: The study's findings reveal that firm-specific factors, particularly firm size and tangibility, and macroeconomic factors such as interest rates and exchange rates significantly influence capital structure decisions in Sri Lanka's automobile and consumer goods sectors. The overall model demonstrates statistical significance at the 1% level across both sectors. These insights highlight the critical importance of tailored financing strategies for different industries, enabling firms to enhance their financial stability and performance.