The study tests the relationship between capital structures and share prices of the listed companies of Muscat Securities Market (MSM). It considers all the 113 listed companies registered in MSM for three main sectors for a period of eight years i.e. 2008 till 2015. It analyzes the relationship between share price and capital structure by employing correlation analysis and multiple regression analysis in a panel framework. We found an inverse relationship between amount of debt and share prices. Further a positive relationship between amount of equity and share prices and debt equity ratio. The results were statistically significant at 1% level of significance. The results indicate adding debt to overall capital inversely effects the share prices. The results are in tandem to Net Income Approach which portrays capital structure to influence firm value.