Capital Structure Determinants and Financial Performance Analytical Study in Saudi Arabia Market 2004-2009

Salameh, Hussein

doi:10.2139/ssrn.3574780

Cited by 6 publications

(8 citation statements)

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“…In addition, growth also has a significant positive effect on profitability. This result is in line with the research conducted by Ahmed Sheikh and Wang (2013), Goyal (2013), Quang and Xin (2014) and Salameh et al (2012). This means that companies that have high growth tend to get high profitability as well.…”

Section: Resultssupporting

confidence: 89%

“…This means that liquidity has a positive effect on profitability. This result is in line with the findings of Isik (2017) and Salameh et al (2012). On the contrary, Vătavu (2015) actually found that liquidity has a negative effect on profitability.…”

Section: Literature Reviewsupporting

confidence: 90%

“…In other words, companies that have high growth tend to have high profitability as well. The results of this study are in accordance with the research conducted by Ahmed Sheikh and Wang (2013), Goyal (2013) and Salameh et al (2012). In contrast, according to Titman and Wessels (1988), companies that have high growth tend to have many investment choices.…”

Section: Literature Reviewsupporting

confidence: 90%

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The effect of capital structure on profitability and stock returns

Junaedi

Wijaya

Suharti

et al. 2019

JCEFTS

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PurposeThe purpose of this study is to examine the factors that influence capital structure, profitability and stock returns and the relationship between capital structure, profitability and stock returns. The endogenous variables in this study are capital structure, profitability and stock returns, whereas the exogenous variables are firm size, growth opportunity, tangibility, liquidity, volatility and uniqueness.Design/methodology/approachThe population used is a company that is listed on the compass index 100 period of August 2016. A total of 64 companies are sampled in this study. The unit of analysis is 448 data. The data analysis technique used is path analysis with the help of AMOS.FindingsThe results obtained show only profitability variables that affect stock returns. Variable capital structure, firm size, growth opportunity, tangibility and liquidity have no significant effect. Variables that influence capital structure are only influenced by growth opportunity, whereas other variables are not significant and variables that affect profitability are firm size, growth opportunity, uniqueness and volatility.Originality/valuePath analysis is a model similar to the multiple regression analysis, factor analysis, canonical correlation analysis, discriminant analysis and more general multivariate analysis groups. This research discusses that capital structure is useful for increasing the value of the company in the sense that the more debt that is used, a tax deduction will be obtained because of interest costs. So that the company’s profits will increase and eventually will increase the value of the company. This opinion remains a controversy among financial experts. Until now, there is no agreement that can explain the capital structure in all conditions of the company. There are two important theories concerning capital structure, trade-off theory and pecking order theory.

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Section: Resultssupporting

confidence: 89%

Section: Literature Reviewsupporting

confidence: 90%

Section: Literature Reviewsupporting

confidence: 90%

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The effect of capital structure on profitability and stock returns

Junaedi

Wijaya

Suharti

et al. 2019

JCEFTS

View full text Add to dashboard Cite

show abstract

“…The research results point to the fact that there is a correlation between the income tax rate and the indebtedness of the companies. The importance of the country in which businesses operate was confirmed by the study of Salameh et al (2012). These authors conducted their research on a sample of companies operating in Saudi Arabia in 2004 -2009.…”

Section: Literature Reviewmentioning

confidence: 95%

Differences in the financial structure of Slovak and Czech enterprises operating in machinery manufacturing and equipment industry

Kalusová¹,

Badura²

2020

Journal of International Studies

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The paper offers a thorough study of the selected factors influencing the financial structure of Slovak and Czech companies operating in the machinery and equipment industry. These factors were broken down into internal factors (profitability, company size, liquidity, assets' structure, business risk, non-debt tax shield and company's age) and the external factors (economic cycle, inflation, interest rate and tax rate). The aim of the paper was to analyze, evaluate and assess whether there were differences in the influence of these factors (i.e. different direction and intensity of their impact) on the financial structure of Slovak and Czech enterprises. The analysis was done for the years 2014-2018. The multiple regression analysis was used as the main research method. The research results pointed to the fact that the financial structure of Slovak and Czech companies was affected mainly by the influence of internal corporate factors, and moreover, there were also certain differences between Slovak and Czech enterprises-not only in intensity but even in the direction of action of these factors. Given the internal structure of financing sources and based on our findings, our recommendations were that in the area of financial structure of enterprises, they should focus their attention primarily on corporate liquidity (Slovak enterprises in particular). At the same time, it was clear that the government policy should focus on improving law enforcement in trade relations and also improving the protection of creditors' rights, as business loans were the most used external sources of funding.

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“…In the context of Saudi Arabia, three studies have been conducted that, surprisingly, show mixed results. Salameh (2012) and Suleiman (2013) report a negative association between capital structure and firm performance, whereas Twairesh (2014) finds a significant and positive association.…”

Section: Introductionmentioning

confidence: 99%

هیکل رأس المال وأداء الشرکة: دلیل من الشرکات السعودیة غیر المالیة بموجب المعیار الدولی لإعداد التقاریر المالیة رقم 16(باللغة الانجلیزیة)

الحسين¹,

السلطان²

2021

مجلة الاسکندریة للبحوث المحاسبیة

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This paper examines the relationship between capital structure and firm performance and considers the moderating effect on this relationship of the issuance of International Financial Reporting Standards (IFRS) 16. The study sample consists of 101 Saudi nonfinancial firms listed on the Tadawul between 2017 and 2020. The study uses two proxies for firm performance: an accounting-based measure using return on assets and a market-based measure using Tobin's q. Capital structure is measured using financial leverage. To avoid bias in the results, the study employs six control variables: growth, firm size, tangibility, risk, investment, and industry. The existing theory posits a positive relationship; however, using ordinary least squares regression, this study finds that high leverage firms in Saudi Arabia are associated with lower performance. IFRS 16 was only found to have a significantly positive impact on market performance.

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Capital Structure Determinants and Financial Performance Analytical Study in Saudi Arabia Market 2004-2009

Cited by 6 publications

References 0 publications

The effect of capital structure on profitability and stock returns

The effect of capital structure on profitability and stock returns

Differences in the financial structure of Slovak and Czech enterprises operating in machinery manufacturing and equipment industry

هیکل رأس المال وأداء الشرکة: دلیل من الشرکات السعودیة غیر المالیة بموجب المعیار الدولی لإعداد التقاریر المالیة رقم 16(باللغة الانجلیزیة)

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