This study tests the effect of capital structure on the profitability of the Iraqi firms that listed in Iraq stock exchange. The study used statistical methods such as multiple regression model represented by ordinary least squares (OLS) as a technique to investigate the claimed effect of capital structure on the profitability by applying the same on four firms from the Iraqi industrial sector for the period (2004-2013). The study findings suggest that capital structure positively influence, in a significant way, on the profitability of listed firms in Iraq. Furthermore, profitability, and assets (firm-size) have been found to be negatively influencing the capital structure of the listed firms. These findings generally concur with the predictions of the pecking order theory and the signalling effects of capital structure decisions of firms. The concerned companies must have to enhance their firm size that negatively correlated with ROE, its growth and continuity
Keywords: Capital Structure; Profitability; Empirical Analysis, Iraqi Listed Firms
