Published Online:January 2026
Product Name:The IUP Journal of Applied Finance
Product Type:Article
Product Code:IJAF040126
DOI:10.71329/IUPJAF/2025.32.1.68-101
Author Name:Mensah Marfo and Edward Annan
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:68-101
Ghana’s pursuit of sustainable corporate growth continues to depend on effective financial management and leadership practices within its capital market. However, the extent to which transformational leadership can influence the relationship between capital structure decisions and firm value remains less examined. Using evidence from 30 firms listed on the Ghana Stock Exchange in the Greater Accra Region, this study investigates how leadership behavior shapes the effectiveness of financial decisions in improving firm performance. Data were collected from 413 senior executives and finance officers through a structured questionnaire and analyzed using structural equation modeling (SEM) to estimate both direct and moderating effects. The findings reveal that sound capital structure decisions significantly enhance firm value by ensuring an efficient balance between debt and equity financing. Transformational leadership also contributes positively to firm value by fostering innovation, commitment, and goal alignment. Moreover, it strengthens the relationship between capital structure and firm value, demonstrating that leadership qualities that inspire and motivate employees amplify the impact of financial strategies. The study reinforces the trade-off theory, pecking order theory, and resource-based view (RBV) by illustrating that effective financial performance depends on both strategic financing decisions and visionary leadership. These findings provide practical guidance to firms and policymakers seeking to enhance firm value through integrated financial and leadership approaches in developing economies.
Capital structure remains a central theme in corporate finance as it determines how firms finance their operations through a combination of debt, equity, and retained earnings.