Capital Structure and Corporate Performance: Evidence from Jordan

Abstract

This study is to investigate the effect which capital structure has had on corporate performance using a panel data sample representing of 167 Jordanian companies during 1989-2003. Our results showed that a firm's capital structure had a significantly negative impact on the firm's performance measures, in both the accounting and market's measures. We also found that the short-term debt to total assets (STDTA) level has a significantly positive effect on the market performance measure (Tobin's Q). The Gulf Crisis 1990-1991 was found to have a positive impact on Jordanian corporate performance while the outbreak of Intifadah in the West Bank and Gaza in September 2000 had a negative impact on corporate performance. ABSTRACTThis study is to investigate the effect which capital structure has had on corporate performance using a panel data sample representing of 167 Jordanian companies during 1989-2003. Our results showed that a firm's capital structure had a significantly negative impact on the firm's performance measures, in both the accounting and market's measures. We also found that the short-term debt to total assets (STDTA) level has a significantly positive effect on the market performance measure (Tobin's Q).

Capital structure and company performance: The case of free zone companies in Ghana

“…The hypothesis that a company's capital structure should have a negative impact on its performance is confirmed. The results of this hypothesis are consistent with the research results of Onaolapo and Kajola's (2010), Fosberg and Ghosh's (2006), Houang and Song's (2006), Mramor and Crnigoj's (2009) and Zeitun and Tian's (2007) work. Company growth opportunities show a positive and statistically significant relationship with ROA at the 10% level.…”

“…Company growth opportunities show a positive and statistically significant relationship with ROA at the 10% level. The results of this hypothesis are not consistent with the results obtained from the researches of Zeitun and Tian (2007) and Onaolapo and Kajola (2010). Size of the company, age, quick ratio and asset structure did not show any significant relationship with ROA.…”

“…Several others have reported a negative relationship between debt and financial achievement like Fama and French (1998) and Simerly and Li (2000). Capital structure is said to be closely linked to the financial performance (Zeitun & Tian 2007). San and Heng (2011), in their research, studied the relationship between capital structure and corporate performance of Malaysian construction sector from [2005][2006][2007][2008].…”

Sermaye Yapisinin Fi̇rma Değeri̇ Ve Fi̇rma Performansina Etki̇si̇: Ampi̇ri̇k Bi̇r Anali̇z

“…Bu bulgular daha önce Türkiye'de ve gelişmekte olan ülkelerde firma performansı ve firma değeri üzerinde yapılan bazı çalışmalarda elde edilen bulgularla benzerlik göstermektedir (Mukherji, Dhatt, & Kim, 1997;Demir, 2001;Zeitun & Tian, 2007;Birgili & Düzer, 2010;Pratheepkanth, 2011;Ahmad, Abdullah & Roslan, 2012;Yener & Karakuş, 2012;Ayrıçay & Türk, 2014). Bahse konu çalışmalar, bu çalışmada olduğu gibi sermaye yapısı ile firma performansı ve değeri arasında negatif bir ilişki olduğu sonucuna varmışlardır.…”

Study on Listing Financing Distribution of GEM Companies and Influence Factors

“…A few of them take the macro-economic environment into account and integrate internal and external factors to give an overall consideration of the influence factors on enterprise development. For instance, Demsetz [4] suggested that different external environment lead to different equity financing structures of enterprises; in the study on the relationship between financing structure and financial performance, RamiZeitun et al [5] found that the financing structures of 167 Jordanian companies were significantly negatively correlated to their financial performances, and the companies' business performances were affected by the macro-environment. As for domestic scholars, Sun Linjie and Sun Linzhao [6] carried out the analytic hierarchy process and found that the R&D ability, financial status and other factors are the primary influence factors on enterprise's financing capacity.…”