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The relationship between capital structure and ownership structure: New evidence from Jordanian panel data

Author

Listed:
  • Basil Al-Najjar
  • Peter Taylor

Abstract

Purpose - The study aims to investigate the comparatively under-researched relationship between ownership structure and capital structure in an emerging market. It is also one of the first studies to apply both single and reduced-form equation methods using a panel data approach. Findings - The results demonstrate that Jordanian firms follow the same determinants of capital structure as occur in developed markets, namely: profitability, firm size, growth rate, market-to-book ratio, asset structure and liquidity. In addition, institutional ownership structure is found to be determined by: assets structure, business risk (BR), growth opportunities and firm size. Finally, the results reveal that assets tangibility, firm size, growth opportunities and BR are considered to be joint determinants of ownership structure and capital structure. Practical implications - The practical implication of the study is that investors and managers should consider both capital structure and ownership structure when they take their investment decisions. Originality/value - This is the first study of the interaction between institutional ownership and capital structure in Jordan where there are differences, as regards institutional and financial structures, relative to those in developed markets.

Suggested Citation

  • Basil Al-Najjar & Peter Taylor, 2008. "The relationship between capital structure and ownership structure: New evidence from Jordanian panel data," Managerial Finance, Emerald Group Publishing, vol. 34(12), pages 919-933, October.
  • Handle: RePEc:eme:mfipps:v:34:y:2008:i:12:p:919-933
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    Citations

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    Cited by:

    1. Karart─▒, Tuncay, 2014. "Impact of ownership structure on leverage of non-financial firms in developing countries," MPRA Paper 61483, University Library of Munich, Germany.
    2. repec:nea:journl:y:2017:i:36:p:107-134 is not listed on IDEAS
    3. repec:umk:journl:v:9:y:2017:i:2:p:35-53 is not listed on IDEAS
    4. repec:rss:jnljef:v3i2p4 is not listed on IDEAS
    5. repec:bla:ausecp:v:55:y:2016:i:4:p:319-344 is not listed on IDEAS
    6. Demircio─člu, Emre, 2014. "Organization performance and happiness in the context of leadership behavior (case study base on psychological well-beings)," MPRA Paper 61484, University Library of Munich, Germany.
    7. repec:abd:kauiea:v:30:y:2017:i:1:p:105-116 is not listed on IDEAS
    8. Felix Babatunde Dada & Ben Ukaegbu, 2015. "The Pecking Order Theory: Evidence from Listed Firms in Nigeria," International Finance and Banking, Macrothink Institute, vol. 2(2), pages 72-84, December.
    9. Nirosha Hewa Wellalage & Stuart Locke, 2013. "Capital structure and its determinants in New Zealand firms," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 14(5), pages 852-866, November.
    10. repec:abd:kauiea:v:30:y:2017:i:1:no:10:p:105-116 is not listed on IDEAS
    11. repec:rss:jnljef:v2i1p2 is not listed on IDEAS
    12. Khaled Hussainey & Khaled Aljifri, 2012. "Corporate governance mechanisms and capital structure in UAE," Journal of Applied Accounting Research, Emerald Group Publishing, vol. 13(2), pages 145-160, September.
    13. repec:eco:journ1:2017-04-26 is not listed on IDEAS
    14. Sasho Arsov & Aleksandar Naumoski, 2016. "Determinants of capital structure: An empirical study of companies from selected post-transition economies," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 34(1), pages 119-146.
    15. repec:eco:journ1:2018-02-22 is not listed on IDEAS

    More about this item

    Keywords

    Corporate ownership; Capital structure; Jordan;

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