The Relationship between Capital Structure and Profitability of Companies listed on the Yangon Stock Exchange (YSX)

Kaung Myat Htun; Dan Kulroop; Nattawut Panya

Authors

Kaung Myat Htun Graduate Student, Master of Business Administration (Accounting), Lampang Rajabhat University
Assistant Professor Dr.Dan Kulroop Faculty of Management Science, Lampang Rajabhat University
Dr.Nattawut Panya Faculty of Management Science, Lampang Rajabhat University

Keywords:

Capital structure, Profitability, Yangon Stock Exchange

Abstract

This research aims to study the relationship between capital structure and profitability of listed companies in the Yangon Stock Exchange. As Myanmar’s capital market is an emerging market with structural financial limitations, empirical research in this setting remains relatively limited. The sample covers the period from 2016 to 2024 and consists of 8 listed firms, yielding a total of 54 firm-year observations. The data are analyzed using descriptive statistics and multiple regression analysis.

The findings reveal that capital structure plays a significant role in explaining firm profitability. Profitability is measured by return on equity (ROE) as the primary indicator, as it captures firm performance from the owners’ perspective. The long-term debt ratio shows a significant negative association with ROE, suggesting that excessive reliance on long-term debt diminishes shareholder returns due to increased financial distress costs and reduced operational flexibility. In contrast, the debt-to-equity ratio exhibits a positive and statistically significant relationship with ROE, indicating that moderate leverage can enhance profitability when borrowing costs remain below investment returns. The findings provide practical implications for managers, investors, and policymakers in relation to financing decisions, firm evaluation, and the strengthening capital market practices in Myanmar.

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