The Effect of Financing Decision on Firm Performance (A Case of Tanzania)

Abstract

This paper examines the effect of financing decision on firm performance using secondary data from Dar es Salaam Stock Exchange (DSE) listed firms in Tanzania. The data analysis used different statistical analysis tools including descriptive statistics, correlation analysis, and regression analysis. The essence of this study is due to the fact that, there are no previous studies examining the relationship between (financing decision) choice of the capital structure and the firm performance done in the area under study for non financial firms regardless of Tanzania being the most growing economy at Sub Sahara Africa countries as its annual economic growth is about 7% for concurrently more than 10 years (World Economic Forum, 2017). This study comprises of 29 listed firms in Tanzania for the period covering 2005 to 2018. The study finds that, financing decision has significant effect on firm performance. This is due to the analysis reports that, all tested performance measures are significant positively affected by short term debt ratio while the only return on assets report the significant negative effect with total debt ratio being the measure of financing decision.  Further studies have to be done on listed financial firms.

Keywords: Financing Decision, Performance, DSE, Tanzania.

DOI: 10.7176/JAAS/60-06

Publication date: January 31^st 2020