Effect of financial leverage on firm growth: empirical evidence from listed firms in Amman stock exchange

Abstract

Past studies have mostly investigated the significance of financial attributes in trade affairs of developed countries, while dismissing such importance among developing nations. As such, this study looked into the influence of financial leverage upon the growth of Jordanian firms. For that purpose, a sample of 91 firms from Jordan had been analyzed via panel data regression method for the period between 2006 and 2015. As a result, the findings portrayed the irrelevance between financial leverage and growth of assets, but a significantly positive correlation with the growth of sales and employment. On top of that, this study revealed that growth of sales and employment had been significantly and positively correlated with firm size. In short, this study dismissed the speculation the constraint Jordanian firms were in, but on the contrary, displayed the ability to gain external financing to ascertain successful progress.

The Effect of Access to Debt on Lebanese Small and Medium Enterprises Performance

“…The regression analysis results support the first hypothesis that access to debt has a positive significant effect on profitability of SMEs, which indicates that Lebanese SMEs should adopt a TOT perspective. This result is in line with the previous studies of Mateev and Anastasov (2010), Li et al (2012), Wang (2013), Ramadan (2015), Manini et al (2016) and Hamouri et al (2018). However, this result is in contradiction to the studies of Goldhausen (2017), Kebewar (2012), Kebewar (2013), Iavorskyi (2013), Nawi (2015), Schulz (2017) and Malaeny et al (2018).…”

“…However, SMEs balance the financing process between internal and external sources in order to lower financing costs, increase profitability and eventually grow and enhance financial performance. Hamouri et al (2018) explained the reasons behind the positive effect of access to debt on the profitability of listed firms in the Amman Stock Exchange. The authors indicated that good management and using mostly short-term debt and overdrafts provides the firms the chance to control and manage debts easily while improving their financial position and reputation.…”

“…However, previous studies considered the effect of access to debt on different sets of performance indicators. Such studies suggest that firm performance in terms of growth can be measured in different ways, such as firm size (Delmar, Davidsson & Gartner, 2003;Zhou & Wit, 2009;Moreira, 2016;Hamouri, Al-Rdaydeh & Ghazalat, 2018), assets (Andree & Kallberg, 2008;Mateev & Anastasov, 2010;Li, Jinfeng & Xuezhu, 2012;Nawi, 2015;Jeger, Sarlija & Bilandzic, 2016;Goldhausen, 2017;Ando, Matsumoto & Matsumoto, 2017), revenue and profit (Baum, Schafer & Talavera, 2007;Kebewar, 2012;Li et al , 2012;Wang, 2013;Tang, 2014;Popa & Ciobano, 2014;Nawi, 2015;Ramadan, 2015;Abeywardhana, 2015;Muscettola & Naccarato, 2016;Schulz, 2017;Goldhausen, 2017;Malaeny et al , 2018) and innovation and exports (Harvie, Narjoko & Oum, 2013;Amornkitvikai & Harvie, 2016). However, the results on the effect of access to debt on profitability and assets are contradictory, varying from a positive effect to a negative effect or insignificant effect.…”

The Controlling of Ownership on the relationship between Financial Performance and Capital Structure in Indonesia

“…The firm's capital structure is a specific ratio of long-term debt and equity that the management uses to finance its investments and business expansion. The choice of optimal capital sources that may come from within and from external of the company affects the cost of capital (Hamouri, Al-Rdaydeh, & Ghazalat, 2018;Ţaran, 2019). Arsov & Naumoski (2016) and Khalid (2010) state that a company's capital decision depends on the category of the company or industry.…”

The Effect of International Currency Crises on the Balance of Payments: Evidence From Jordan

“…Notably, developing countries mainly suffer or are disadvantaged in many respects due to the openness of their economies to the economies of other developed countries, making them more vulnerable or exposed to international economic variations or fluctuations. As such, they are more exposed to external crises, which adversely affects the extent of stability from a local perspective (Alawin & Oqaily, 2017;Hamouri, et al, 2018). Moreover, the impact brought about through the external changes of a country is also affected by its BoP, which, in turn, is also affected by developing countries in addition to external indebtedness, foreign aid, and grants, including ERs, changes in terms of trade, slowing growth rates, real international INTs, and internal factors including fiscal deficit and indebtedness.…”