This study examines the relationship between capital structure decisions and firm performance in emerging markets, where financial constraints, market imperfections, and institutional factors significantly influence corporate financing behavior. Using panel data from selected non-financial firms operating in emerging economies, the study analyzes how leverage ratios—such as debt-equity ratio and long-term debt—affect firm performance measured through Return on Assets (ROA), Return on Equity (ROE), and Tobin’s Q. Employing regression techniques, the findings reveal a significant association between capital structure and firm performance, supporting the trade-off and pecking order theories in the context of emerging markets. The results provide valuable insights for managers, investors, and policymakers in optimizing financing decisions to enhance firm value and financial sustainability.