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Debt-Performance Relation. Evidence from Jordan

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  • Imad Zeyad Ramadan

    (Applied Science University)

Abstract

We investigated the debt-performance relation for all 77 Jordanian industrial companies over the period between 2000 and 2011. By utilizing 2 alternative measurements of profitability ratio, as proxies of the firm’s performance, that are ROA and ROE, three types of debt as proxies of the debt structure that are LTD, STD, and TD, with the existence of three control variables that are SIZE, SGR, and EFFI, six models were tested using unbalanced pooled cross-sectional time series regression method. The results of this paper show that debt structure expressed as: LTD, STD, and TD have a negative and significant relationship with ROA. Also the measures of the debt structure, except for the LTD, have the same significant relation with ROE. The finding of this study confirm the pecking order theory, and are consistent with those obtained by Wang (2010) Kayo, E.K. and Limura, H. (2010), and Vasiliou et al.,(2009).

Suggested Citation

  • Imad Zeyad Ramadan, 2013. "Debt-Performance Relation. Evidence from Jordan," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(1), pages 323-331, January.
    • Handle: RePEc:hur:ijaraf:v:3:y:2013:i:1:p:323-331
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    References listed on IDEAS

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    Keywords

    Debt; performance; Jordan;
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