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Moderating effect of competitive strategies on the relation between financial leverage and firm performance: Evidence from Jordan

Business and Economic Horizons (BEH), 2018-05, Vol.14 (3), p.626-641

ISSN: 1804-1205 ;DOI: 10.22004/ag.econ.287219

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  • Title:
    Moderating effect of competitive strategies on the relation between financial leverage and firm performance: Evidence from Jordan
  • Author: Al-Rdaydeh, Mahmoud ; Almansour, Ammar Yaser ; Al-mari, Mohammad Ahmad
  • Subjects: competitive strategies ; Financial leverage ; firm performance ; industrial firms ; Industrial Organization ; Jordan
  • Is Part Of: Business and Economic Horizons (BEH), 2018-05, Vol.14 (3), p.626-641
  • Description: This study examined the moderating role of competitive strategy in the relationship between financial leverage and performance of firms based on a sample of industrial firms in Jordan between 2007 and 2016. The interaction between competitive strategy and financial leverage was revealed to influence the effects of financial leverage towards the performance of firms in terms of return on assets (accounting-based measure) and market-to-book ratio (market-based measure). Conclusively, obtained results are in line with the notion that firms that employ cost leadership strategy experience tax advantages and increased efficiency through debt financing and/or debt covenants. This study extends the overall understanding on the effects of financial leverage towards performance of firms and how this relationship is moderated by competitive strategy among firms in an emerging market such as Jordan.
  • Language: English
  • Identifier: ISSN: 1804-1205
    DOI: 10.22004/ag.econ.287219
  • Source: AgEcon
    ROAD: Directory of Open Access Scholarly Resources

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