Capital structure decisions have important implications on the value of the firm, as the components of the capital determine the cost of capital. The guiding principle is to choose the capital structure that maximizes the value of the firm. The objective of this study is to find out the determinants of capital structure of Oman corporate. This study is based on the financial data collected from the balance sheets and income statements of all companies listed in the Muscat Securities Market excluding banks, financial institutions and insurance companies. The sample includes 82 firms. The period of study is six years from 2006 to 2011.This study implies that in the context of lower profitability of firms, the firms tend to use more leverage as a means of sourcing finance. The study also finds that the decision to increase leverage is a function of efficiency of utilization of assets. Higher the efficiency in asset turnovers more is the tendency to use leverage. Another implication of the study is that leverage is a function of size. Companies which increase their revenues tend to be become debt intensive.

Capital structure decisions have important implications on the value of the firm, as the components of the capital determine the cost of capital. The guiding principle is to choose the capital structure that maximizes the value of the firm. The objective of this study is to find out the determina...