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Abstract

This study examines the relationship between capital structure and financial performance. It is
motivated by a desire to explain debt use by Omani firms. The results of this study suggest that,
contrary to the Trade-off Theory of capital structure, there is a negative association between the
level of debt and financial performance. This can be attributed to the high cost of borrowing and
the underdeveloped nature of the debt market in Oman. The tax savings that the firm receives by
using debt does not seem to be sufficient to outweigh the costs of using debt including the high
interest cost.

INTRODUCTION

Capital Structure is a topic that continues to keep researchers pondering. Capital structure refers
to the firm's financial framework. Primarily, it consists of the debt and equity used to finance the
firm. Researchers continue to analyze capital structures and try to determine whether optimal
capital structures exist. An optimal capital structure is usually defined as one that will minimize a
firm's cost of capital, while maximizing firm value. Hence, capital structure decisions have great
impact on the success of the firm. Exactly how firms choose the amount of debt and equity in
their capital structures remains an enigma. Are firms mostly influenced by the traditional capital
structures of their industries or are there other reasons behind their actions? The answers to these
questions are very important, because the actions managers take will affect the performance of
the firm, as well as influence how investors will perceive the firm.

THE RATIONALE FOR THE SELECTION OF THE SULTANATE OF OMAN FOR THIS
STUDY

Most of the research studies on capital structure have used data from American of European
companies. The Sultanate of Oman was chosen for this study because it has a unique tax
environment. The absence of personal taxes of any kind and the very low corporate tax rate in
Oman, when compared to Western countries, provides a unique environment in which finance
theories can be tested. While there is a vast amount of literature on corporate financial policy and
impact of debt on performance (Barton and Gordon, 1988; Bettis, 1983; Bradley, Jarrell, and
Kim, 1980; Capon, Farley, and Hoenig 1990, Titman and Wessels 1988), these studies focus on
firms in developed countries, where there are both corporate taxes and personal taxes. The very
few studies that analyze the capital structure and its impact on the firm performance in emerging
markets are somewhat dated, use limited data, or have a narrow focus. This study attempts to fill
the gap in the literature by looking at this relationship for listed Omani firms. This unique study
is the first to look at capital structure and financial performance in the absence of personal taxes,
which tended to complicate previous studies. This is also the first study on capital structure using
data from the Middle-East.
The Tax-based theory suggests that in a world with only corporate taxes and no personal taxes,
the tax deductibility of interest for corporations creates a clear preference for debt in the
corporate capital structure. Therefore, firms that are highly levered are supposed to outperform
their counterparts that are less levered. This study provides a unique opportunity to examine the
validity of the above statement and whether the financial performance of Omani firms can be
explained by Finance theory.

OBJECTIVE OF THIS STUDY

The objective of this paper is to investigate the impact of financial leverage on performance of
publicly traded Omani companies. Financial leverage refers to the use of debt in a firm's capital
structure.

Although there has been a great deal of research on the subject of capital structure, this study
makes a contribution to the literature in this area because it is an attempt to unfold the capital
structure practices of companies operating in a unique environment. This is the environment
where there are no personal taxes, a flat corporate tax rate, and a financial market system that is
not very efficient. Lack of market efficiency means information flow is not objectively available
to all the interested parties. However, before looking into the specifics of these companies, it
would be more appropriate to review the literature available on this subject to see if the results
drawn from our analysis ate in conformity with the trends in capital structure.

REVIEW OF LITERATURE

It was in 1958, when Modigiliani and Miller (M & M) wrote a paper on the irrelevance of capital
structure that inspired researchers to debate on this subject. This debate is still continuing.
However, with the passage of time, new dimensions have been added to the question of
relevance or irrelevance of capital structure. M&M declared that in a world of frictionless capital
markets, there would be no optimal financial structure (Schwartz & Aronson, 1979). This theory
later became known as the "Theory of Irrelevance'. In M & M's over-simplified world, no capital
structure mix is better than another. M & M's Proposition-II attempted to answer the question of
why there was an increased rate of return when the debt ratio was increased. It stated that the
increased expected rate of return generated by debt financing is exactly offset by the risk
incurred, regardless of the financing mix chosen.

This is followed by Merton H. Miller's 1977 paper, which takes into account not only the
corporate taxes but personal taxes as well. The Pecking Order Theory and the Tradeoff theory
followed Professor Miller's seminal paper. Pecking Order theory (Myers, 1984) provides a
preferential order in terms of using different financing instruments. Unlike M & M's over
simplified Irrelevance theory, Pecking order theory considers the consequences of debt and
equity issues for a firm. It basically states that firms will consider all methods of financing
available and use the least expensive source first (Myers, 1984: 581-2; Brealey and Myers, 2000:
524-8). It further suggests that firms should consider financing new projects in the following
manner: first use internal equity, next use debt and last use external equity (Titman and Wessels,
1988:6). The important difference is that the equity is divided into two parts, namely, internal
equity and external equity. Internal equity is that which is readily available for investment,
whereas external equity is that which must be obtained from outside sources.

Pecking Order theory suggests that firms issuing debt send a positive signal about their future
prospects. This also shows that the company has more investment opportunities and growth
prospects than it can handle with the internally generated funds. The reasoning behind this is that
managers who are unsure of future profitability will not subject the firm to bankruptcy risks.
Therefore, only those firms that are confident of their ability to repay obligations will issue debt.
In summary, according to signaling theory in finance, equity is issued to spread risk amongst
equity holders, while debt is issued to avoid sharing wealth. This aspect of signaling theory is
consistent with shareholder wealth maximization, and therefore has wide support.

On the other hand, the Trade-off theory suggests that firms with substantial amount of intangible
assets should rely on equity financing, whereas those firms having tangible assets should rely
more heavily on debt financing (Harris and Raviv (6), 1990:323). However, it is evident that the
advantages and disadvantages of offering excessive debt are significant. Trade-off theory
acknowledges the tax advantages of debt, while considering the threat of bankruptcy associated
with it. According to Myers, Trade-off theory is easily accepted because it explains why firms do
not use excessive debt (Myers, 1984: 589) (1)

SOME RECENT STUDIES

In a recent study, Frank and Goyal (2003) tested the Pecking order theory over the 1971 through
1998 period. They found that, in contrast to Pecking order theory, internal financing is not
sufficient to cover investment spending on average, external financing is heavily used, and debt
financing does not dominate equity financing. On the issue of determinants of capital structure,
Bancel and Mittoo (2004) found that large firms ate less concerned about bankruptcy costs, and
high-growth firms consider common stock as the cheapest source of funds and use windows of
opportunity to issue common stock. Chen (2004) found that Chinese firms prefer short-term
finance and have substantially lower amount of long-term debt. However, this result is to be
viewed in the context of developing nature of Chinese economy. This paper also concluded that
the Trade-off model or the Pecking order hypothesis, based on Western settings, fail to explain
the capital structure preferences of Chinese firms. This could also be true for present study on
companies in the Sultanate of Oman. This may be due to the fact that the Omani financial market
is in a developing stage and, unlike Western countries; there are no personal taxes in Oman.

Another study by Hovakimian and Tehranian (2004) concluded that the importance of stock
returns in studies of corporate financing choices is unrelated to target leverage and is likely to be
due to the correlation between Pecking order theory and Market timing behavior theory. This
study also found that profitability has no effect on target leverage. Unprofitable firms issue
equity to offset the excess leverage due to accumulated losses. Thus, this study supports the
notion that firms have a target capital structure. However, preference for internal financing and
the temptation to time the market by selling new equity, when the share price is relatively high,
interfere with the tendency to maintain the firm's debt ratio close to its target.
In order to better understand capital structure, the considerations in raising capital are briefly
addressed in Part one of the paper. Part two of the paper discusses the methodology and the
sample used in the study. Part four of the paper discusses the results of the study. Part five
provides the conclusions and offers some suggestions for future research.

PART ONE: CONSIDERATIONS IN RAISING CAPITAL

The topic of capital structure remains elusive due to the number of factors influencing capital
structure decisions. At first glance it appears that management must only decide between the
amount of debt and equity used in the firm's capital structure. But this is far from being the case
as there ate many more criteria that must be kept in mind. In determining the method in which to
raise capital, John Martin and David Scott (1974) claim that firms must consider seven
conditions. These conditions are: "leverage, liquidity, profitability, dividends, market price, firm
size, sales growth and variability". Each of these will be briefly discussed.

Leverage refers to debt securities the firm issues in order to raise the needed capital. Careful
attention must be given to the amount of leverage a firm carries in its capital structure. Managers
must keep in mind the uncertainty of future profitability, as well as the amount of bonds the firm
will have outstanding. This is important due to the fact that the company is committing itself to
periodical interest payments in addition to the repayment of principal. Due to the legal
requirement that a firm commits itself to when issuing bonds, the bondholders have the recourse
to force the firm into liquidation if the firm is unable to meet its payment obligations. Given the
consequences of issuing debt, it would stand to reason that firms would avoid issuing bonds.
However, liquidity must also be considered since a company faced with the threat of bankruptcy
would be better able to absorb more debt, given that it owns enough liquid assets. Liquidity
measures the ability of the firm to convert its assets quickly by selling them (2). Those assets that
are most easily converted to cash ate called liquid assets or near liquid assets. A company faced
with the threat of bankruptcy may convert its liquid assets into the funds required more easily
(Ibid: 73; Baumol and Malkiel, 1967: 562).

In regards to profitability, an increased use of debt will lead to a higher debt-to-assets ratio. The
debt-to-assets ratio measures the amount of funds borrowed by the firm in relation to its assets.
The leverage (debt equity mix) magnifies the EPS for a firm with positive earnings. At the same
time, it magnifies the losses for a firm with negative earnings. Profitability is a measure of the
earning power of a firm. The earning power of the firm is the basic concern of its owners. Myers
(1977) presents evidence that firms prefer raising capital from retained earnings than from debt
and the issuance of common equity. This is the so-called Pecking order theory supports this
finding. If this theory is true, higher profitability will correspond to lower debt equity ratio.

Another concern in choosing between debt and equity financing is the company's continued
ability to pay out consistent dividends. Dividends could induce a firm to use debt as a tool to
maintain them if cash flow became a problem. Jensen et al. (1992), provide empirical evidence to
suggest that greater dividends are associated with greater debt use. Should the company choose
to issue stock rather than bonds, it is not obligated to make dividend payments. However, the
reluctance to pay out dividends has its own consequences. Firms unintentionally send negative
signals to investors when there is a decline in consistent dividend payments or a reduction in the
amount paid out. This causes a decline in the price of the firm's stock (Brigham and Houston,
2004: 488-9; Martin and Scott, 1974: 73; Titman and Wessels, 1988: 2).

Next, the size of the company must be considered. Larger, well-known firms have greater access
to the long-term capital market than smaller unknown firms. Smaller, unknown firms tend to
either borrow short-term by means of bank loans, or issue stock (Martin and Scott, 1974: 73;
Cragg and Baxter, 1970: 1310-24) (3). This explains why larger companies will lean toward debt
financing and smaller firms towards equity financing. However, Titman and Wessels state that
large corporations who have tax deductions for depreciation expenses, in addition to investment
credits, will issue less debt. This is due to the fact that firms use tax deductions and credits in lieu
of the tax advantages associated with the issuance of debt (Titman and Wessels, 1988:3).
Conversely, size could affect debt available to firms due to information asymmetry. Myers and
Majluf (1984) state that information asymmetry leads firms to prefer debt, since equity is likely
to be undervalued in the market. This suggests that larger firms, with less information
asymmetry, will have more debt available to them. Barclay and Smith (1996) found the same and
added that larger firms have lower issue costs of debt. The empirical evidence supports this.
Brander and Lewis (1986) present a model where they showed that oligopoly is associated with
high debt level. Studies by Marsh (1982) and Chung (1993) find that larger firms use more debt
in their capital structure.

Lastly, firms must consider its sales growth and the variability. A firm whose growth is
somewhat stable will feel more confident about its ability to repay debt and will tend to issue
bonds. On the other hand, those firms whose sales growth tends to fluctuate more will issue
common stock when raising capital (Martin and Scott, 1974:73 and 1975:70). Higher sales are
shown to be associated with greater debt in a model by McAndrews and Nakamura (1992), and
supported by empirical work carried by Long and Malitz (1985), and Jarrel and Poulson (1988).
However, Maksimovic and Zechner (1991) indicate a negative relationship, which is supported
empirically by Kester (1986), Friend and Lang (1988), and Titman and Wessels (1988). The
advantage of issuing stocks rather than bonds is that the firm will avoid the bankruptcy risks
associated with debt financing. However, the disadvantage of issuing stocks is that it will lead to
dilution in earnings per share. Ivo Welch (2004) found that stock returns are a first-order
determinant of debt ratios. Lastly, investors view stock issuance negatively, since it portends
financial problems for the firm.

DETERMINATION OF CAPITAL STRUCTURE

Exactly how managers set the proportions of debt and equity used in the firm's capital structure
continues to remain a puzzle (4). It could be reasoned that firms within the same industry would
have similar capital structures and behave in a similar manner. However, this is far from being
the case, as debt-to-equity ratios continue to vary even between companies within the same
industry.

Unlike the Pecking order theory, Trade-off theory does not acknowledge that the issuance of
equity reflects the accumulated need for external financing. This, in conjunction with the nature
of assets held by individual companies, may account for varying ratios between firms (Myers,
1984:590). In addition, Trade-off theory fails to explain why firms, considered most profitable,
ate generally conservative rather than highly leveraged. Myers believes that more attention
should be given to the costs of restructuring the ratios of debt and equity used, and less on
perfecting static trade-off theories (Myers, 1984:590). According to Myers, "if there were no
costs of adjustment, and the static Trade off theory is correct, then each firm's observed debt-to-
value ratio should be its optimal ratio" (Ibid: 577). Therefore, Fischer, Heinkel and Zechner
choose to view the firm's optimal capital structure as dynamic, rather than static (Fischer,
Heinkel, and Zechner, 1984: 19-20). In addition to considering the risks involved in debt
financing, managers should also consider "underlying asset variability, the riskless rate of
interest, and the size of costs of recapitalization" (Ibid: 20). Hence, viewing capital structures as
dynamic, rather than static, would explain why debt ratios vary in companies that have similar
capital structures (Ibid: 38-9). As previously stated, larger firms tend to issue more debt than
smaller firms. However, Scott and Martin's 1975 study of twelve industries yielded results that
supported the notion that financial structures are determined by the nature of the industry (Scott
and Martin 1975:69,71). A possible explanation for capital structure differences may be the
industry class to which the firm belongs. The results of Titman and Wessels 1988 study implied
that low debt ratios were found for firms with "unique or specialized products" (Titman and
Wessels, 1988: 2, 5). Typically, high-tech companies with large amounts of intangible assets will
use less debt than companies whose assets are tangible. Pharmaceutical companies will often
tend to have low debt ratios since they are highly involved in research and development and the
intangible assets associated with such companies ate of extreme importance to the continued
success of the company (Brigham and Houston, 2004: 492-94). Therefore, we could rationally
expect firms belonging to the same industry would exhibit similar capital structures. In addition,
larger and more established firms are expected to use more debt than newer firms that do not
have a significant track record.

PROFILE OF SULTANATE OF OMAN, ITS ECONOMIC STATUS, AND CAPITAL

MARKETS

The Sultanate of Oman is one of the Middle-Eastern countries with significant natural resources
in the form of oil and natural gas. It has a substantial trade surplus, and low inflation. The
Government of Oman believes in liberalization of markets. As a result, the process of
privatization is currently underway. It has initiated the privatization of its utilities and
diversification of its economy to attract foreign investment. Oman joined the World Trade
Organization (WTO) in November 2000.

Oman produces around 700,000 barrels oil per day and this represents about 90% of Oman's
exports. With favorable economic conditions, due to high oil prices, Oman is quickly investing
in building its infrastructure. It is the only oil-producing nation in the Middle East that is not a
member of OPEC. Oman is also making deliberate effort to diversify its resources and wants to
have more contribution from non-oil sector in the future. Currently, oil contributes 33.5% of the
GDP, which would be reduced to 9% by 2020. Further, the government wants to see more
contribution to GDP from natural gas and manufacturing sector.

The securities market in Oman [also known as Muscat Securities Market (MSM) is governed by
Omani Capital Market Law of 1998. Oman also has a parallel market which is used by those
companies that do no qualify for listing in the MSM (Al-Rimawi, 2001). The MSM General
Index has peaked to 4,832.00 from 1,919.00 in 2002.

PART TWO: DATA COLLECTION

The data required for this study was collected from the Muscat Securities Market (MSM) and the
Capital Market Authority of the Sultanate of Oman.

ANALYSIS

There are totally 144 companies listed on the MSM. Out of this number, 93 companies are non-
financial firms and were chosen for this study. These 93 firms were ranked in descending order
by the debt ratio. The top 25% of the companies and the bottom 25% of the companies were
chosen and classified into separate groups. The top 25% of the companies were designated as the
"high leverage" group and the bottom 25% of the companies were designated the "low leverage"
group. Five performance measures were used to determine which group (i.e. high leverage or
low leverage) has performed better over the five-year period 1998-2002.

PERFORMANCE MEASURES

The performance factors identified in the literature as candidates for the relationship with a firm's
capital structure ate the focus of this study. Management researchers prefer accounting measures
of performance, such as return on equity (ROE), return on investment (ROI), and return on assets
(ROA), along with the variability in these returns measures. Researchers from finance and
economics seem to prefer market returns or cash flow measures along with their variability as
performance measures. The performance measures in previous studies typically measure ah
accounting rate of return. The idea behind this measure is perhaps to evaluate performance from
a managerial standpoint. Return on investment (ROI), return on capital (ROC), return on assets
(ROA) and return on sales (ROS) are essentially efficiency measures. That is, how well
management is using the assets (as measured in dollar terms) to generate accounting returns per
dollar of investment, assets or sales. ROA and ROE are the most frequently used performance
measures in prior studies. (Carter, 1977:279-89; McDougall and Round, 1984:384-98). ROA has
been used in this study as the performance measure as it is a commonly used indicator of
managerial performance. In addition to ROA, for the companies in each of the groups, other
financial performance measures, namely, operating profit margin (OPM), return on equity
(ROE), net profit margin (NPM), and earnings per share (EPS) were computed for five years
1998-2002. All explanatory proxies are averaged over a five-year period (1998-2002), to
minimize the measurement error due to random year-to-year fluctuation in variables. The
standard deviation of these performance measures was also obtained in order to assess the
volatility. The results of this first stage of the analysis are shown in Tables 1 and 2.

FURTHER EMPIRICAL ANALYSIS

In order to gain further insight into the relationship between financial leverage and performance,
a regression analysis was performed. Cross-sectional data on listed Omani companies was
obtained from the Muscat Securities Market and carefully examined before the regression
analysis was performed.

The DEBT RATIO, which is the ratio of total debt to total assets, was used as the principal
explanatory variable. The dependent variable was profitability as measured by Return on Assets
(ROA). ROA was chosen as the dependent variable because it is an important accounting-based
and widely accepted measure of financial performance.

In order to recognize the fact that a number of factors may impact on profitability, other
variables were also chosen as explanatory variables and are used in this study as control
variables.

The efficiency in the use of assets is likely to be an important determinant of profitability. Hence,
an asset management variable, total asset turnover ratio (TAT) was included. It was expected that
TAT would have a positive relationship with performance.

Firm liquidity is an actual performance factor that views access to cash from asset conversions or
by access to debt markets as good. Myers (1984) and Gertler (1988) argue that small firms are
apt to have less liquidity and hence, use less debt. On the other hand, Aggrawal and Nagarajan
(1990) find a negative association between liquidity and debt use. The reason for this finding
could be that firms are concerned with financial risk. Hence, a liquidity variable, quick ratio
(QR) was included. If a firm has sizable liquid assets, this is expected to have a negative impact
on profitability, as liquid assets ate low-yielding assets. Hence, it was expected that QR would
have a negative relationship with performance.

As the size of the firms may be an important determinant of profitability, a variable SIZE was
included. In accordance with standard practice, size was measured as the log of total sales.
According to Penrose (1959), larger firms can enjoy economies of scale and these can favorably
impact on profitability. Larger firms may also be able to leverage their market power (Shepherd,
1986). Size is expected to have a positive relationship with profitability.

The age of the firms may also have an important influence on performance. Hence, a control
variable, AGE, was introduced as the number of years since the inception of the firm to the
observation date. The impact of age on performance was left to be empirically determined.

Corporate diversification remains a controversial area with the finance literature making a strong
case against it (Brealey & Myers, 2000), while the Strategic Management literature seems to
favor it (especially related diversification). Segment sales information was not available for
Omani companies. Hence, an index variable DIVERSIFICATION was included, with a value of
0 for no diversification and 1 for diversification. The impact of diversification on performance
was left to be empirically determined

CAPITAL INTENSITY, as measured by the ratio of net fixed assets to total assets, and
INVENTORY, the ratio of inventory to total assets, were also included. The impact of capital
intensity on performance was left to be empirically determined. As capital is locked up in
inventories, holding large amounts of inventory could have a negative impact on profitability.
Hence, a negative relationship was expected between inventory and performance.

RESULTS

Tables 1 and 2 clearly show that the low leverage group clearly outperformed the high leverage
group. This result was consistent across all five performance measures. The volatility (standard
deviations) for all the five performance measures for the low leverage group was lower than that
for the high leverage group.

The results of the regression are shown in Table 3. The explanatory power of the model was
quite good with an R-square of nearly 60%. Debt ratio (DR) was found to be negative and
significant. This confirms that financial leverage has a negative relationship with performance.
This is also consistent with the findings by Majumdar and Chhibber (1997). Of the seven control
variables introduced in the model, three of them are significant, at a minimum of 10% level of
significance. CAPINT was significant, but surprisingly had a negative relationship to
performance. AGE was positive and significant. According to Stinchcombe (1965), older firms
can achieve experience-based economies and can avoid the liabilities of newness. Quick ratio
(QR) was negative and significant as expected.

DISCUSSION AND IMPLICATIONS

The regression results confirm the negative relationship between financial leverage and
performance. The regression results further suggest that liquidity, age, and capital intensity also
have a significant influence on financial performance.

These results suggest that a high debt capital structure is not appropriate for Omani companies.
The reasons for this could be the following:

1. Due to the absence of a well developed and very liquid bond market, Omani companies ate
dependent on banks for debt financing. The interest cost in Oman is very high when compared to
Western countries. Even those companies that are good performers at the operating profit level
turn out to be poor financial performers at the net profit level due to the high interest cost. Hence,
until there is a well-developed bond market, it would be prudent for Omani companies to reduce
their debt financing and instead use internal cash flow or equity to meet their financing needs.

2. Given the unique tax environment in Oman, there is minimal tax advantage from using
financial leverage. Hence, it makes little sense for Omani companies to take on a lot of debt
when doing so does not confer the tax benefits in Oman as it does in Western countries.

3. Oman is an emerging economy. Using high amounts of debt in an economy that is in the
nascent stage of development is fraught with risk.

CONCLUSION
This study investigated the relationship between financial leverage and performance for a cross-
section of listed Omani companies and found a negative relationship that is contrary to the view
held in Western countries. The high cost of bank debt in Oman coupled with the absence of a
well-developed bond market was viewed as the primary reasons for the observed relationship. In
addition, the very low, flat corporate tax rate in Oman implies that debt does not confer the same
level of tax shield benefits in Oman as it does in Western countries. Hence, at this time, use of a
high level of debt financing by Omani companies may not be a prudent strategy.

IMPLICATIONS FOR MANAGERS

Overall, these results demonstrate a negative association between debt and firm performance.
What does this say to managers? We believe that it says that it you can operate your business
effectively without going into debt, do so. Avoid debt.

This may be particularly relevant to Oman. The cost of borrowing in Oman is phenomenally high
by international standards. Whereas investors are currently offered rates of interest between 10%
and 15% annually by financial institutions, the costs to borrowers of funds from banks and other
financial institutions ate much higher, given the risk premium and the administrative costs that
are added on. One would hypothesize that the negative aspects of debt noted earlier would be
exacerbated by the high current interest premium.

NOTES

(1.) Firms do not borrow the maximum amount they are able to and hold a reserve of borrowing
capacity. This helps to keep the firm within a sale debt range (Myers, 1984: 589).

(2.) Liquidity is measured by the firms ability to convert its assets into cash without significant
loss of value. For example, consider the fact that treasury bonds held by a firm are more easily
converted than a physical asset, such as equipment.

(3.) Take note that when external equity is used, smaller firms will suffer larger flotation costs
that affects its financing decision. Flotation costs are those costs the firm must pay to issue new
stocks or bonds. The higher the flotation cost, the smaller the size of the new issue (Brigham and
Houston, 2004: 367-68).

(4.) Recall Stewart Myers 1984 paper entitled "The Capital Structure Puzzle" which raised many
questions regarding capital structure. Almost two decades later, the researchers are still
attempting to explain and dispute some of the questions and issues raised by Myers (Myers,
1984: 575-592).

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NARENDAR V. RAO

Northeastern Illinois University, Chicago

KHAMIS HAMED MOHAMED AL-YAHYAEE

Sultan Qaboos University

LATEEF A.M. SYED

Robert Morris College, Chicago

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COPYRIGHT 2007 Indian Journal of Economics and Business
COPYRIGHT 2008 Gale, Cengage Learning

Narendar V. Rao "Capital structure and financial performance: evidence from Oman". Indian
Journal of Economics and Business. FindArticles.com. 12 Oct, 2009.
http://findarticles.com/p/articles/mi_m1TSD/is_1_6/ai_n25012613/
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