The Impact of Capital Structure on the Performance of the Jordanian Publicly-Held Industrial Companies

Tawfiq Abdel-Jalil

Abstract


This article examines the impact of capital structure on the performance of the Jordanian publicly- held industrial companies registered in Amman Stock Exchange for a period of five years (2008 to 2012). The multiple regression analysis was used to show the impact of capital structure represented by debt ratio, debt to equity ratio, growth percentage, and assets turn over, on firm performance represented by return on investment, and return on equity. The multiple regression results indicated:
1. A negative statistical relationship, at 10% significance level, between debt ratio and return on investment. However, the results did not indicate, at 10% significance level, any statistical relationship between debt equity ratio and return on investment.
2. A negative statistical effect, at 1% significance level, between debt equity ratio and return on equity. However, the results did not indicate, at 10% significance level, any statistical relationship between debt ratio and return on equity.
3. A positive statistical relationship, at 1% significance level, between assets turnover and growth percentage on one hand with return on investment on the other hand. The results, as well, indicated a positive statistical effect between assets turnover and growth percentage on one hand (at 5% and 1% significance levels respectively) with return on equity on the other hand.

Keywords


Capital Structure, Firm Performance, Amman Stock Exchange, Jordan

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