Since our interest is about capital structure and firm performance, we narrow down the
research problem based on the background presented in the previous section; our research
question is stated as below:
“How could the relationship between capital structure and firm performance among Swedish
listed firms be described during the period 2002-2011?”
Our aim is to find out whether there is a relationship between capital structure and firm
performance in listed Swedish firms context or not and how capital structure affects on firm
performance.
Additionally, we set out a sub-question to explore whether or not this relationship might be
affected by which industry a certain firm is a part of. Thus, we will phrase our sub-question of
this study as following:
“How the industry may affect the relationship between capital structure and firm
performance among Swedish listed firms during the period 2002-2011?”

Research Objectives
The main objective of this study is to find an answer to the research question and sub-
question. When we answer them, we expect to find three possible scenarios. First, we may
find that the relationship between capital structure and firm performance is positive. It means
that using the leverage increases firm performance. Second, we may find that the relationship
between capital structure and firm performance is negative and the leverage decreases firm
performance. Third, we may find that there is no relationship between capital structure and
firm performance. Since other researchers find a positive or negative relationship between
capital structure and firm performance, we expect to find a relationship. However, we do not
know the direction of the relationship. Therefore, to find out the direction is also part of our
research objective. Additionally, we would like to examine whether industry affect the
relationship between capital structure and firm performance.

Consequently, the research objectives can be summarized as follow:
• To investigate the relationship between capital structure and firm performance in the
listed Swedish firm context.
• To examine the effect of industry to the relationship between capital structure and firm
performance in the listed Swedish firm context