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An Empirical Investigation of the Associations of Short and Long Debt Policies with Economic Values of Energy Sector

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  • Omer Bagais

    (Department of Accounting, College of Business Administration, Prince Sattam bin Abdulaziz University, Saudi Arabia.)

  • Khaled Aljaaidi

    (Department of Accounting, College of Business Administration, Prince Sattam bin Abdulaziz University, Saudi Arabia.)

  • Abdulaziz Alothman

    (Department of Accounting, College of Business Administration, Prince Sattam bin Abdulaziz University, Saudi Arabia.)

Abstract

The purpose of this paper is to empirically investigate the impact of short and long-term debt policies on economic values of energy sector in Saudi Arabia. Pooled OLS Regression model is utilized to analyze eight years of energy companies data (2012-2019) to report the association between two measures of capital structure, namely; short-term and long-term debt policies, and firm economic value after controlling for firm size and inventory management. Empirical findings suggest that the two measures of capital structure impact negatively on firm economic value in energy industry in Saudi Arabia. The results of this study have several policy implications for financial managers, banks, investors, auditors, and stock market authority to understand why capital structure impacts the firm sustainability in a negative way.

Suggested Citation

  • Omer Bagais & Khaled Aljaaidi & Abdulaziz Alothman, 2021. "An Empirical Investigation of the Associations of Short and Long Debt Policies with Economic Values of Energy Sector," International Journal of Energy Economics and Policy, Econjournals, vol. 11(1), pages 249-254.
  • Handle: RePEc:eco:journ2:2021-01-31
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    More about this item

    Keywords

    Capital structure; firm sustainability; energy industry; Saudi Arabia.;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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