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Financial leverage and firm performance evidence from Amman stock exchange

The European journal of comparative economics : EJCE, 2019-01, Vol.16 (2), p.207-237 [Peer Reviewed Journal]

2019. This work is published under https://creativecommons.org/licenses/by-nc-nd/3.0 (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;EISSN: 1824-2979 ;DOI: 10.25428/1824-2979/201902-207-237

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  • Title:
    Financial leverage and firm performance evidence from Amman stock exchange
  • Author: Abu-Abbas, Bassam M ; Alhmoud, Turki ; Algazo, Fatima A
  • Subjects: Bankruptcy ; business strategy ; Companies ; Competitiveness ; Differentiation ; Economic models ; Financial leverage ; firm performance ; Hypotheses ; Leverage ; Organizational performance ; Product differentiation ; Studies
  • Is Part Of: The European journal of comparative economics : EJCE, 2019-01, Vol.16 (2), p.207-237
  • Description: This study tests the relationship between financial leverage and firm performance. Previous studies found mixed results (e.g., Gill et al. 2011, Mouna et al. 2017, and Abubaker (2015). Some suggest including the effect of the firms' business strategy and the degree of competitiveness on the relationship between the financial leverage and the firms' performance. Data is subjected to pooled General Least Square to test the hypotheses of the study. Based on a sample from Amman Stock Exchange, the study finds that the financial leverage has a negative relationship with the firm performance proxies by ROA and EVA. In addition, the relationship between financial leverage and performance is more negative for the firms that use product differentiation strategy compared with the firms that use low-cost strategy and for the firms with a high degree of competitiveness compared with the firms with a low degree of competitiveness. Different tests including the Wald F-test on the linear restrictions support confirm the above conclusions. Different diagnostic tests show that the results are reliable, free from autocorrelation, robust, and not affected by multicollinearity.
  • Publisher: Castellanza: Università Carlo Cattaneo - Biblioteca Mario Rostoni
  • Language: English
  • Identifier: EISSN: 1824-2979
    DOI: 10.25428/1824-2979/201902-207-237
  • Source: ProQuest Central
    DOAJ Directory of Open Access Journals
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