The influence of religion on the determinants of capital structure: the case of Saudi Arabia

Alalmai, Somaiyah; Al-Awadhi, Abdullah M.; Hassan, M. Kabir; Turunen-Red, Arja H.

doi:10.1108/jiabr-03-2018-0043

Cited by 10 publications

(16 citation statements)

References 70 publications

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“…The activities of distributors as a party that supplies goods from producers to consumers do not guarantee their fixed assets for debt financing as their business capital. This result is in line with the results of previous research conducted by Zaheer et al (2021), Alalmai et al (2020), Gharaibeh &Al-Tahat (2020), andKyissima et al, (2020) who found that tangibility does not affect capital structure.…”

Section: Effect Of Tangibility (Tang) On Capital Structuresupporting

confidence: 93%

“…Therefore, companies prefer to use retained earnings. This result is in line with the results of previous research conducted by Oliveira & Raposo (2021), Zaheer et al (2021), Alalmai et al (2020), and Gharaibeh & Al-Tahat (2020) who found that profitability has a negative effect on capital structure.…”

Section: Effect Of Profitability (Roa) On Capital Structuresupporting

confidence: 93%

“…Companies that have large retained earnings will use them as capital, so large retained earnings will improve the company's capital structure and reduce capital from external funds (Brigham & Houston, 2018). Previous research conducted by Oliveira & Raposo (2021), Zaheer et al (2021), Alalmai et al (2020), andGharaibeh &Al-Tahat (2020) state that profitability has a negative effect on capital structure. Based on the results of the description and previous research, the hypothesis is proposed as follows:…”

Section: Profitabilitymentioning

confidence: 99%

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The Impact of Financial Ratios and Growth Opportunity on Capital Structure A Moderation Role of Firm Size

Gusfriyanto,

Sihombing

2024

IJDMS

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This study aims to examine the impact of liquidity, profitability, tangibility, and growth opportunity with firm size as a moderating variable on capital structure in distributor companies listed on the IDX Consumer Non-Cyclical for the period 2018-2022. The sampling technique used in this study was purposive sampling. The sample in this study consisted of 7 companies. This study uses panel data analysis techniques with moderated regression analysis (MRA) on E-views 13. Empirical results show that liquidity and profitability have a negative effect, and growth opportunity has a positive effect on capital structure, while tangibility does not affect capital structure. Firm size can only moderate growth opportunity to weaken the negative effect on capital structure, while tangibility cannot be moderated by firm size

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Section: Effect Of Tangibility (Tang) On Capital Structuresupporting

confidence: 93%

Section: Effect Of Profitability (Roa) On Capital Structuresupporting

confidence: 93%

Section: Profitabilitymentioning

confidence: 99%

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The Impact of Financial Ratios and Growth Opportunity on Capital Structure A Moderation Role of Firm Size

Gusfriyanto,

Sihombing

2024

IJDMS

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“…Following previous studies, leverage is measured by various proxies (Farooq, 2015; Sheikh and Qureshi, 2017; Poursoleiman et al , 2020; Uz Zaman et al , 2020; Alalmai et al , 2020; Uz Zaman et al , 2022). First, we use the ratio of total debts to total assets (TL) to proxy the firm’s total leverage.…”

Section: The Empirical Methodologymentioning

confidence: 99%

The heterogeneous effect of leverage on firm performance: a quantile regression analysis

Ghardallou

2023

IMEFM

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Purpose The purpose of this study is to look at the effect of financial leverage on the performance of Saudi listed companies. It particularly proposes to examine the heterogeneity of this relationship depending on firm profitability and firm size. Design/methodology/approach The paper uses a sample of 120 nonfinancial companies listed on the Tadawul stock exchange during the period 2017–2020. Data is obtained from the companies’ financial reports. This study uses the system GMM and the quantile regression. The first methodology examines the effect of leverage decisions on firm performance, whereas the second one tests the heterogeneity of this relationship. Findings GMM results demonstrate the adverse effect of leverage on firm performance in terms of return on assets, return on equities and Tobin’s Q. Besides, quantile regression results show that this relationship is heterogeneous. Particularly, leverage seems to have a greater adverse effect on the performance of high-profitable firms than low-profitable firms. Moreover, leverage has a negative effect in larger firms, whereas the influence becomes negative in smaller ones. Originality/value This study is unique in that it approaches the capital structure issue from a different perspective, where the leverage decision is distinctly considered at various levels of firm profitability and firm size. In addition, the majority of the existing studies is carried out in developed countries. However, the results might not apply to emerging countries given the specificity of their institutional structure. In this regard, Saudi Arabia has a distinctive business climate characterized by the absence of corporate tax and an illiquid bond market.

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“…Previous studies (e.g., Conroy & Emerson, 2004; Iannaccone, 1998; Su, 2019) have recognized religion as a strong predictor of the economic and social behaviors of individuals. Furthermore, religion is considered an important institution affecting the economic behavior of firms and business practices of both developed and developing countries in the Middle East and North Africa (MENA) region (e.g., Alalmai et al., 2020; Jamali et al., 2020; Leventis et al., 2018; McGuire et al., 2012). Prior accounting and auditing research (Dyreng et al., 2012; Leventis et al., 2018) has revealed that religiosity significantly influences corporate reporting irregularities (McGuire et al., 2012), tax compliance (Wang & Lu, 2020), earnings management (Kanagaretnam et al., 2015), accounting conservatism (Ma et al., 2020), and audit going‐concern opinions (Omer et al., 2018).…”

Section: Introductionmentioning

confidence: 99%

Islamic Religious Atmosphere and Audit Pricing: Evidence from Iran

Khodakarami

Rezaee

Hesarzadeh

2021

Business Ethics Env & Resp

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This study examines whether the Islamic religious atmosphere of local communities influences audit pricing. We use a comprehensive survey conducted by Iran's Ministry of Culture and Islamic Guidance to measure the Islamic religious atmosphere. Using a sample of 1,204 observations from firms listed in Iran's capital market, we find that firms located in regions with a strong Islamic religious atmosphere pay significantly lower audit fees. Furthermore, the study reveals that family ownership (auditor size) strengthens (weakens) the aforementioned relationship. However, we did not find a significant moderating role for the local community's social capital. We contribute to the ethics literature by providing a better understanding of the economic consequences of the religious atmosphere and offering policy, practical, and educational implications.

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The influence of religion on the determinants of capital structure: the case of Saudi Arabia

Cited by 10 publications

References 70 publications

The Impact of Financial Ratios and Growth Opportunity on Capital Structure A Moderation Role of Firm Size

The Impact of Financial Ratios and Growth Opportunity on Capital Structure A Moderation Role of Firm Size

The heterogeneous effect of leverage on firm performance: a quantile regression analysis

Islamic Religious Atmosphere and Audit Pricing: Evidence from Iran

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