Investigating Capital Structure, Performance and Stock Price in U.S. Technology Firms: Panel Data Analysis

Abstract

The study investigates the relationship among liquidity substituted by current ratio CR., capital structure proxied via debt to equity D/E ratio, the financial performance represented by return on equity ROE plus return on assets ROA, and stock price SP. Technology firms listed on the NASDAQ 30 index in America, which use generally accepted accounting principles (GAAP), are considered. Data is from the Standard and Poor S&P 500 database. The data set contains 672 observations with n=12. Data collected is of technology firms which operate in cash, have quarterly reports from 2005-2018, have no missing data, and are not disqualified during the study period. The study applies the pooled regression, the fixed effect, and the random effect techniques and the panel data analysis. The findings indicate a relationship between capital structure, financial performance, and stock price. This paper benefits internal and external stakeholders and may enhance business operations leading to higher financial performance.