Capital Structure and Corporate Performance: Empirical Study on the Public Jordanian Shareholdings Firms Listed in Amman Stock Market

Abstract

The study investigates the effect of capital structure on the performance of the public Jordanian firms listed in Amman stock market. The study used  multiple regression  model represented by ordinary least squares (OLS) as a technique to examine what is the effect of capital structure on the performance  by applying on 76 firms(53 industrial firms  and 23 service corporation) for the period(2001-2006).The results of the study concluded that capital structure associated negatively and statistically with firm performance on the study sample generally. In addition, the study found out that there is no differences for the impact of the financial leverage between high financial leverage firms and low financial leverage firms on their performance. Finally , the study also showed that the effect of financial leverage on the basis  of the growth that there is no difference between the financial leverage of high growth firms and low growth firms on the performance, which it was negatively and statistically.

Key words: capital structure , performance ,profitability ,debt, financial leverage, firm and Jordan