IDEAS home Printed from https://ideas.repec.org/a/ibn/ibrjnl/v13y2020i1p109-120.html
   My bibliography  Save this article

Impact of Financial Leverage, Size and Assets Structure on Firm Value: Evidence from Industrial Sector, Jordan

Author

Listed:
  • Zaher Abdel Fattah Al-Slehat

Abstract

The present study aims at revealing the financial leverage, Size, and asset structure and its impact on the values of firms. The researcher used the analytical method approach for a sample of 13 firms from the mining and extraction industry sector listed on the Amman stock exchange of the period 2010-2018.The model of simple line regression was used for testing the hypotheses of the study by using both programs of (E-views, STATA) in addition to both programs of unit root test and variance inflation factor to make sure of the data stability and no relationship between variables. The study concluded the non-existence of the impact of financial leverage on the firm value and the relationship between the financial leverage and Tobin’s q scale was negative. However, there was an impact of each size and asset structure on firm value and the relationship between the natural logarithm of size and asset structure was positive with Tobin’s q. The study recommends that Companies must achieve an optimal mixture of debt and equity, for long-term survival and hence the growth of the company.

Suggested Citation

  • Zaher Abdel Fattah Al-Slehat, 2020. "Impact of Financial Leverage, Size and Assets Structure on Firm Value: Evidence from Industrial Sector, Jordan," International Business Research, Canadian Center of Science and Education, vol. 13(1), pages 109-120, January.
    • Handle: RePEc:ibn:ibrjnl:v:13:y:2020:i:1:p:109-120
    as

    Download full text from publisher

    File URL: http://www.ccsenet.org/journal/index.php/ibr/article/download/0/0/41545/43087
    Download Restriction: no
    File URL: http://www.ccsenet.org/journal/index.php/ibr/article/view/0/41545
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yusuf Ayturk & Ali Osman Gurbuz & Serhat Yanik, 2016. "Corporate derivatives use and firm value: Evidence from Turkey," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 16(2), pages 108-120, June.
    2. Harris, Milton & Raviv, Artur, 1991. "The Theory of Capital Structure," Journal of Finance, American Finance Association, vol. 46(1), pages 297-355, March.
    3. Al-Rdaydeh, Mahmoud & Almansour, Ammar Yaser & Al-mari, Mohammad Ahmad, 2018. "Moderating effect of competitive strategies on the relation between financial leverage and firm performance: Evidence from Jordan," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 14(3), May.
    4. Rajan, Raghuram G & Zingales, Luigi, 1995. "What Do We Know about Capital Structure? Some Evidence from International Data," Journal of Finance, American Finance Association, vol. 50(5), pages 1421-1460, December.
    5. Raza, Muhammad Wajid, 2013. "Affect of financial leverage on firm performance. Empirical evidence from Karachi Stock Exchange," MPRA Paper 50383, University Library of Munich, Germany.
    6. ŞENOL, Zekai & KARACA, Süleyman Serdar & ERDOĞAN, Seda, 2017. "The Effects Of Financial Risk Management On Firm’S Value: An Empirical Evidence From Borsa Istanbul Stock Exchange," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 21(4), pages 27-45.
    7. Argyro Panaretou, 2014. "Corporate risk management and firm value: evidence from the UK market," The European Journal of Finance, Taylor & Francis Journals, vol. 20(12), pages 1161-1186, December.
    8. Lindenberg, Eric B & Ross, Stephen A, 1981. "Tobin's q Ratio and Industrial Organization," The Journal of Business, University of Chicago Press, vol. 54(1), pages 1-32, January.
    9. Mahmoud Al-Rdaydeh & Ammar Yaser Almansour & Mohammad Ahmad Al-Omari, 2018. "Moderating effect of competitive strategies on the relation between financial leverage and firm performance: evidence from Jordan," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(3), pages 626-641, June.
    10. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Saifullah Khan & Adnan Shoaib, 2024. "Firm value adjustment speed through financial friction in the presence of earnings management and productivity growth: evidence from emerging economies," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guney, Yilmaz & Li, Ling & Fairchild, Richard, 2011. "The relationship between product market competition and capital structure in Chinese listed firms," International Review of Financial Analysis, Elsevier, vol. 20(1), pages 41-51, January.
    2. Jianjun Miao, 2005. "Optimal Capital Structure and Industry Dynamics," Journal of Finance, American Finance Association, vol. 60(6), pages 2621-2659, December.
    3. Hayam Wahba, 2014. "Capital structure, managerial ownership and firm performance: evidence from Egypt," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(4), pages 1041-1061, November.
    4. Drobetz, Wolfgang & Pensa, Pascal & Wöhle, Claudia B., 2004. "Kapitalstrukturtheorie in Theorie und Praxis: Ergebnisse einer Fragebogenuntersuchung," Working papers 2004/09, Faculty of Business and Economics - University of Basel.
    5. Thi Hong Hoang & Călin Gurău & Amine Lahiani & Thuy-Luu Seran, 2018. "Do crises impact capital structure? A study of French micro-enterprises," Small Business Economics, Springer, vol. 50(1), pages 181-199, January.
    6. Rana El Bahsh & Ali Alattar & Aziz N. Yusuf, 2018. "Firm, Industry and Country Level Determinants of Capital Structure: Evidence from Jordan," International Journal of Economics and Financial Issues, Econjournals, vol. 8(2), pages 175-190.
    7. Mário Santos & António Moreira & Elisabete Vieira, 2014. "Ownership concentration, contestability, family firms, and capital structure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(4), pages 1063-1107, November.
    8. Sjur Westgaard & Amund Eidet & Stein Frydenberg & Thor Christian Grosås, 2008. "Investigating the Capital Structure of UK Real Estate Companies," Journal of Property Research, Taylor & Francis Journals, vol. 25(1), pages 61-87, August.
    9. Fattouh, Bassam & Pisicoli, Beniamino & Scaramozzino, Pasquale, 2024. "Debt and financial fragility: Italian non-financial companies after the pandemic," Economic Modelling, Elsevier, vol. 131(C).
    10. Bamiatzi, Vassiliki & Efthyvoulou, Georgios & Jabbour, Liza, 2017. "Foreign vs domestic ownership on debt reduction: An investigation of acquisition targets in Italy and Spain," International Business Review, Elsevier, vol. 26(5), pages 801-815.
    11. Sanjiva Prasad & Christopher J. Green & Victor Murinde, 2005. "Company Financial Structure: A Survey and Implications for Developing Economies," Chapters, in: Christopher J. Green & Colin Kirkpatrick & Victor Murinde (ed.), Finance and Development, chapter 12, Edward Elgar Publishing.
    12. Muhammad Yusuf Amin & Amanat Ali & Bashir Khan, 2019. "Capital Structure of Chinese Firms Across different Sectors: Does Ownership Structure Matter?," Global Economics Review, Humanity Only, vol. 4(2), pages 70-82, June.
    13. Andrew Benito, 2003. "The capital structure decisions of firms: is there a pecking order?," Working Papers 0310, Banco de España.
    14. Ravid, S. Abraham & Venezia, Itzhak & Ofer, Aharon & Pons, Vicente & Zuta, Shlomith, 2007. "When are preferred shares preferred? Theory and empirical evidence," Journal of Financial Stability, Elsevier, vol. 3(3), pages 198-237, October.
    15. Fattouh, Bassam & Scaramozzino, Pasquale & Harris, Laurence, 2005. "Capital structure in South Korea: a quantile regression approach," Journal of Development Economics, Elsevier, vol. 76(1), pages 231-250, February.
    16. Qiao Liu & Kit Pong Wong, 2011. "Intellectual Capital and Financing Decisions: Evidence from the U.S. Patent Data," Management Science, INFORMS, vol. 57(10), pages 1861-1878, October.
    17. Florence André-Le Pogamp & Frédéric Perdreau, 2009. "Stratégies de diversification et structure du capital," Revue Finance Contrôle Stratégie, revues.org, vol. 12(4), pages 5-38, December.
    18. Jarle Møen & Dirk Schindler & Guttorm Schjelderup & Julia Tropina, 2011. "International Debt Shifting: Do Multinationals Shift Internal or External Debt?," Working Paper Series of the Department of Economics, University of Konstanz 2011-40, Department of Economics, University of Konstanz.
    19. Antonczyk, Ron Christian & Salzmann, Astrid Juliane, 2014. "Overconfidence and optimism: The effect of national culture on capital structure," Research in International Business and Finance, Elsevier, vol. 31(C), pages 132-151.
    20. Peter Kugler & Beatrice Weder, 2004. "International Portfolio Holdings and Swiss Franc Asset Returns," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 140(III), pages 301-325, September.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ibrjnl:v:13:y:2020:i:1:p:109-120. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.