The Relationship between Capital Structure and Firm Performance: Evidence from Jordan

Khalaf Taani

102 citations0/0 files storedJournal of Finance and Accounting

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Corporate Finance and Governance Financial Analysis and Corporate Governance Working Capital and Financial Performance

Abstract

The purpose of this study is to empirically investigate the relationship between capital structure and firm performance across different industries using a sample of Jordanian manufacturing firms in Jordan. The annual financial statements of 45 manufacturing companies listed on the Amman Stock Exchange were used for this study which covers a period of five (5) years from 2005-2009. Multiple regression analysis was applied on performance indicators such as Return on Asset (ROA) and Profit Margin (PM) as well as Short-term debt to Total assets (STDTA), Long term debt to Total assets (LTDTA) and Total debt to Equity (TDE) as capital structure variables. The results show that there is a negative and insignificant relationship between STDTA and LTDTA, and ROA and PM; while TDE is positively related with ROA and negatively related with PM. STDTA is significant using ROA while LTDTA is significant using PM. The study concludes that statistically, capital structure is not a major determinant of firm performance. It recommends that managers of manufacturing companies should exercise caution while choosing the amount of debt to use in their capital structure as it affects their performance negatively.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 102 citations exist upstream.

References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1958The Cost of Capital, Corporation Finance and the Theory of Investment 1963CORPORATE INCOME TAXES AND THE COST OF CAPITAL: A CORRECTION 2001The theory and practice of corporate finance: evidence from the field 2005Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry 2005The determinants of capital structure: Evidence from China 1986Capital and Ownership Structure: A Comparison of United States and Japanese Manufacturing Corporations 2009The impact of capital‐structure choice on firm performance: empirical evidence from Egypt

Cited by

2017Impacts of Capital Structure on Performance of Banks in a Developing Economy: Evidence from Bangladesh 2020The influence of corporate governance on corporate sustainability: new evidence using panel data in the Iberian macroeconomic environment 2014Effects of Capital Structure on Firm's Performance: Empirical Study of Manufacturing Companies in Nigeria 2014Impact of Capital Structure on Firm Performance: Evidence from Pakistani Firms

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.