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The impact of capital‐structure choice on firm performance: empirical evidence from Egypt

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  • Ibrahim El‐Sayed Ebaid

Abstract

Purpose - The purpose of this paper is to empirically investigate the impact of capital structure choice on firm performance in Egypt as one of emerging or transition economies. Design/methodology/approach - Multiple regression analysis is used in the study in estimating the relationship between the leverage level and firm's performance. Findings - Using three of accounting‐based measures of financial performance (i.e. return on equity (ROE), return on assets (ROA), and gross profit margin), and based on a sample of non‐financial Egyptian listed firms from 1997 to 2005 the results reveal that capital structure choice decision, in general terms, has a weak‐to‐no impact on firm's performance. Originality/value - This is the first study that examines the relationship between leverage level and firm performance in Egypt.

Suggested Citation

  • Ibrahim El‐Sayed Ebaid, 2009. "The impact of capital‐structure choice on firm performance: empirical evidence from Egypt," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 10(5), pages 477-487, November.
    • Handle: RePEc:eme:jrfpps:15265940911001385
    DOI: 10.1108/15265940911001385
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    Cited by:

    1. Sadiq, Misbah & Yousaf, Sheikh Usman & Anser, Muhammad Khalid & Rashid Khan, Haroon ur & Sriyanto, Sriyanto & Zaman, Khalid & Van Tu, Duong & Anis, Siti Nisrin Mohd, 2023. "The role of debt financing in the relationship between capital structure, firm’s value, and macroeconomic factors: To throw caution to the wind," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 212-223.
    2. Andrew E. Hansen-Addy & Davide M. Parrilli & Ishmael Tingbani, 2024. "The impact of trade facilitation on African SMEs’ performance," Small Business Economics, Springer, vol. 62(1), pages 105-131, January.
    3. Ekote Nelson Nnoko & Yuji Maeda, 2023. "Impacts and risks of borrowing on corporate performance: evidence from Japan and Sub-Saharan Africa," Asia-Pacific Journal of Regional Science, Springer, vol. 7(1), pages 119-133, March.
    4. Taslima Akther & Mushfiqur Rahman & Md. Mufidur Rahman, 2023. "Factors influencing commercial bank profitability in Bangladesh: a panel data approach," Future Business Journal, Springer, vol. 9(1), pages 1-20, December.
    5. Chiwei SU & Kaihua WANG, 2022. "Does Optimal Capital Structure Exist in Chinese Military Enterprises? Evidence from Industrial Heterogeneity," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 128-149, December.
    6. Hung, Dang Ngoc, 2022. "The Impact Of Capital Structure On The Enterprise Value: Approaching By Threshold Regression," OSF Preprints rf2mc, Center for Open Science.
    7. Obumneme Renato Anozie & Taiwo Adewale Muritala & Victor Edet Ininm & Nurudeen Salako Yisau, 2023. "Impact of capital structure on financial performance of oil and gas firms in Nigeria," Future Business Journal, Springer, vol. 9(1), pages 1-9, December.
    8. Jaroslav Mazanec, 2023. "Capital Structure and Corporate Performance: An Empirical Analysis from Central Europe," Mathematics, MDPI, vol. 11(9), pages 1-19, April.
    9. Zaheda Daruwala, 2023. "Influence of Financial Leverage on Corporate Profitability: Does it Really Matter?," International Journal of Economics and Financial Issues, Econjournals, vol. 13(4), pages 37-46, July.
    10. Ishmael Tingbani & Godfred Adjapong Afrifa & Venancio Tauringana & Collins Ntim, 2024. "Trade credit and corporate growth," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 206-228, January.
    11. Amanj Mohamed Ahmed & Nabard Abdallah Sharif & Muhammad Nawzad Ali & István Hágen, 2023. "Effect of Firm Size on the Association between Capital Structure and Profitability," Sustainability, MDPI, vol. 15(14), pages 1-17, July.
    12. Olaifa Oluwafemi Olumuyiwa & Yakubu Abubakar & Dangana Umaru, 2020. "Leverage and Profitability of Quoted Health Care Firms in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(2), pages 221-232, February.

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