Global Advanced Research Journal of Management and Business Studies (GARJMBS) ISSN: 2315-5086 November 2012 Vol. 2(11), pp 542-546

Copyright © 2013 Global Advanced Research Journals   

 

Original Research Articles

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

Khalaf  Taani 

Associate Professor, Department of Banking and Finance, Faculty of Finance and Administrative Sciences, Irbid National University, Irbid – Jordan.

E-mail: ktaani@yahoo.com Dr.ktaani@inu.edu.jo 

Accepted 23 September 2013

 

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. 

Keywords: Capital Structure, Firm performance, Amman Stock Exchange, Jordan

Related Articles


Original Research Articles
Sylvia Manjeri Aarakit and Francis Keneth Kimbugwe
Moderating Effect of Organizational Environment on Intrapreneurial Orientation and Firm Performance
Glo. Adv. Res. J. Manage. Bus. Stud. July 2015 Vol: 4(7): - [Abstract] [Full Text - PDF] (771 KB)
Hazem Bader Alkhatib, Abdel Aziz Sharabati, Alaa alhorani Amman, Mohammad Tabieh, Tala Qtaisht, Ziad Obeidat
The Impact of the Global Financial Crisis on the Jordanian GDP
Glo. Adv. Res. J. Manage. Bus. Stud. November 2015 Vol: 4(10): - [Abstract] [Full Text - PDF] (412 KB)
Dr Jihad Alfarajat and Dr Mohammad M Alalaya
Determinants of Growth GDP per capita through Panel Data Analysis in Selected Arab Countries
Glo. Adv. Res. J. Manage. Bus. Stud. September 2017 Vol: 6(5): - [Abstract] [Full Text - PDF] (468 KB)
H. Abo Al-Yazeed, Amani M. Marwan, Attia, A. M., A. Samir, Ammar, A. M
Genetic Characterization of Campylobacter jejuni Isolated from Boiler Flocks
Glo. Adv. Res. J. Manage. Bus. Stud. June 2019 Vol: 8(4): - [Abstract] [Full Text - PDF] (683 KB)
Tibor Bareith
Profit persistence examination in the Hungarian agriculture
Glo. Adv. Res. J. Manage. Bus. Stud. April 2019 Vol: 8(4): - [Abstract] [Full Text - PDF] (227 KB)
Walid K. Bani Salameh
Treatment of Olive mill Wastewater by ozonation and electrocoagulation processes
Glo. Adv. Res. J. Manage. Bus. Stud. August 2015 Vol: 4(4): - [Abstract] [Full Text - PDF] (1,057 KB)

Current Issue

Viewing Options

View Full Article - PDF
Download Full Article - PDF

Search for Articles

Khalaf Taani on Google Scholar
Khalaf Taani on Pubmed

Statistics

Viewed 1597
Printed 497
Downloaded 3585
Powered By iPortal Works