The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse

Ahmad Mohammad Obeid Gharaibeh

doi:doi:10.11648/j.jfa.20150303.13

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The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse

Ahmad Mohammad Obeid Gharaibeh

Received: 29 April 2015 Accepted: 9 May 2015 Published: 19 May 2015

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Abstract

The study investigates the effect of capital structure on the financial performance of the 17 nonfinancial companies listed in the Bahrain Bourse. The investigation was performed using 5 years data for the period from 2009 to 2013. The impact of some key macroeconomic variables (gross domestic product growth and inflation rate) on the performance of the firm was also considered in this study. Multiple regressions represented by ordinary least squares (OLS) were used to examine the effect of the independent variables (capital structure, inflation rate and GDP growth) on the financial performance measures used (ROA, ROE, EPS, and Dividend Yield)). Capital structure is encapsulated by total liabilities to total assets (TLTOTA) and total equity to total assets (EQTOTA). The results indicate that capital structure, represented by total liability to total assets, has a significantly positive impact on the performance of the firm represented by ROE, but not by ROA, EPS, and DIYILD. The results also indicate that lagged performance measures of ROA, ROE, EPS, and DYIELD have a significantly positive influence on the current year’s performance measures of the firm. Moreover, the results indicate that lagged macroeconomic variables of inflation have a significantly negative relationship with certain performance measures (ROA, ROE, and EPS). Furthermore, the results indicate that gross domestic product growth (GDPG) has a significantly negative relationship with financial performance measured by EPS, but not those measured by ROA, ROE and DYIELD.

DOI	10.11648/j.jfa.20150303.13
Published in	Journal of Finance and Accounting (Volume 3, Issue 3, May 2015)
Page(s)	50-60
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Capital Structure, Financial Performance, ROA, ROE, EPS, Total Liability to Total Assets, Total Equity to Total Assets, Dividend Yield

References

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APA Style

Ahmad Mohammad Obeid Gharaibeh. (2015). The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse. Journal of Finance and Accounting, 3(3), 50-60. https://doi.org/10.11648/j.jfa.20150303.13

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ACS Style

Ahmad Mohammad Obeid Gharaibeh. The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse. J. Finance Account. 2015, 3(3), 50-60. doi: 10.11648/j.jfa.20150303.13

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AMA Style

Ahmad Mohammad Obeid Gharaibeh. The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse. J Finance Account. 2015;3(3):50-60. doi: 10.11648/j.jfa.20150303.13

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@article{10.11648/j.jfa.20150303.13,
  author = {Ahmad Mohammad Obeid Gharaibeh},
  title = {The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse},
  journal = {Journal of Finance and Accounting},
  volume = {3},
  number = {3},
  pages = {50-60},
  doi = {10.11648/j.jfa.20150303.13},
  url = {https://doi.org/10.11648/j.jfa.20150303.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20150303.13},
  abstract = {The study investigates the effect of capital structure on the financial performance of the 17 nonfinancial companies listed in the Bahrain Bourse. The investigation was performed using 5 years data for the period from 2009 to 2013. The impact of some key macroeconomic variables (gross domestic product growth and inflation rate) on the performance of the firm was also considered in this study. Multiple regressions represented by ordinary least squares (OLS) were used to examine the effect of the independent variables (capital structure, inflation rate and GDP growth) on the financial performance measures used (ROA, ROE, EPS, and Dividend Yield)). Capital structure is encapsulated by total liabilities to total assets (TLTOTA) and total equity to total assets (EQTOTA). The results indicate that capital structure, represented by total liability to total assets, has a significantly positive impact on the performance of the firm represented by ROE, but not by ROA, EPS, and DIYILD. The results also indicate that lagged performance measures of ROA, ROE, EPS, and DYIELD have a significantly positive influence on the current year’s performance measures of the firm. Moreover, the results indicate that lagged macroeconomic variables of inflation have a significantly negative relationship with certain performance measures (ROA, ROE, and EPS). Furthermore, the results indicate that gross domestic product growth (GDPG) has a significantly negative relationship with financial performance measured by EPS, but not those measured by ROA, ROE and DYIELD.},
 year = {2015}
}

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TY  - JOUR
T1  - The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse
AU  - Ahmad Mohammad Obeid Gharaibeh
Y1  - 2015/05/19
PY  - 2015
N1  - https://doi.org/10.11648/j.jfa.20150303.13
DO  - 10.11648/j.jfa.20150303.13
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 50
EP  - 60
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20150303.13
AB  - The study investigates the effect of capital structure on the financial performance of the 17 nonfinancial companies listed in the Bahrain Bourse. The investigation was performed using 5 years data for the period from 2009 to 2013. The impact of some key macroeconomic variables (gross domestic product growth and inflation rate) on the performance of the firm was also considered in this study. Multiple regressions represented by ordinary least squares (OLS) were used to examine the effect of the independent variables (capital structure, inflation rate and GDP growth) on the financial performance measures used (ROA, ROE, EPS, and Dividend Yield)). Capital structure is encapsulated by total liabilities to total assets (TLTOTA) and total equity to total assets (EQTOTA). The results indicate that capital structure, represented by total liability to total assets, has a significantly positive impact on the performance of the firm represented by ROE, but not by ROA, EPS, and DIYILD. The results also indicate that lagged performance measures of ROA, ROE, EPS, and DYIELD have a significantly positive influence on the current year’s performance measures of the firm. Moreover, the results indicate that lagged macroeconomic variables of inflation have a significantly negative relationship with certain performance measures (ROA, ROE, and EPS). Furthermore, the results indicate that gross domestic product growth (GDPG) has a significantly negative relationship with financial performance measured by EPS, but not those measured by ROA, ROE and DYIELD.
VL  - 3
IS  - 3
ER  -

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Author Information

Ahmad Mohammad Obeid Gharaibeh

Dept. of Banking and Finance, College of Business and Finance, Ahlia University, Manama, Kingdom of Bahrain

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APA Style

Ahmad Mohammad Obeid Gharaibeh. (2015). The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse. Journal of Finance and Accounting, 3(3), 50-60. https://doi.org/10.11648/j.jfa.20150303.13

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ACS Style

Ahmad Mohammad Obeid Gharaibeh. The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse. J. Finance Account. 2015, 3(3), 50-60. doi: 10.11648/j.jfa.20150303.13

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AMA Style

Ahmad Mohammad Obeid Gharaibeh. The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse. J Finance Account. 2015;3(3):50-60. doi: 10.11648/j.jfa.20150303.13

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@article{10.11648/j.jfa.20150303.13,
  author = {Ahmad Mohammad Obeid Gharaibeh},
  title = {The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse},
  journal = {Journal of Finance and Accounting},
  volume = {3},
  number = {3},
  pages = {50-60},
  doi = {10.11648/j.jfa.20150303.13},
  url = {https://doi.org/10.11648/j.jfa.20150303.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20150303.13},
  abstract = {The study investigates the effect of capital structure on the financial performance of the 17 nonfinancial companies listed in the Bahrain Bourse. The investigation was performed using 5 years data for the period from 2009 to 2013. The impact of some key macroeconomic variables (gross domestic product growth and inflation rate) on the performance of the firm was also considered in this study. Multiple regressions represented by ordinary least squares (OLS) were used to examine the effect of the independent variables (capital structure, inflation rate and GDP growth) on the financial performance measures used (ROA, ROE, EPS, and Dividend Yield)). Capital structure is encapsulated by total liabilities to total assets (TLTOTA) and total equity to total assets (EQTOTA). The results indicate that capital structure, represented by total liability to total assets, has a significantly positive impact on the performance of the firm represented by ROE, but not by ROA, EPS, and DIYILD. The results also indicate that lagged performance measures of ROA, ROE, EPS, and DYIELD have a significantly positive influence on the current year’s performance measures of the firm. Moreover, the results indicate that lagged macroeconomic variables of inflation have a significantly negative relationship with certain performance measures (ROA, ROE, and EPS). Furthermore, the results indicate that gross domestic product growth (GDPG) has a significantly negative relationship with financial performance measured by EPS, but not those measured by ROA, ROE and DYIELD.},
 year = {2015}
}

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TY  - JOUR
T1  - The Effect of Capital Structure on the Financial Performance of Listed Companies in Bahrain Bourse
AU  - Ahmad Mohammad Obeid Gharaibeh
Y1  - 2015/05/19
PY  - 2015
N1  - https://doi.org/10.11648/j.jfa.20150303.13
DO  - 10.11648/j.jfa.20150303.13
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 50
EP  - 60
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20150303.13
AB  - The study investigates the effect of capital structure on the financial performance of the 17 nonfinancial companies listed in the Bahrain Bourse. The investigation was performed using 5 years data for the period from 2009 to 2013. The impact of some key macroeconomic variables (gross domestic product growth and inflation rate) on the performance of the firm was also considered in this study. Multiple regressions represented by ordinary least squares (OLS) were used to examine the effect of the independent variables (capital structure, inflation rate and GDP growth) on the financial performance measures used (ROA, ROE, EPS, and Dividend Yield)). Capital structure is encapsulated by total liabilities to total assets (TLTOTA) and total equity to total assets (EQTOTA). The results indicate that capital structure, represented by total liability to total assets, has a significantly positive impact on the performance of the firm represented by ROE, but not by ROA, EPS, and DIYILD. The results also indicate that lagged performance measures of ROA, ROE, EPS, and DYIELD have a significantly positive influence on the current year’s performance measures of the firm. Moreover, the results indicate that lagged macroeconomic variables of inflation have a significantly negative relationship with certain performance measures (ROA, ROE, and EPS). Furthermore, the results indicate that gross domestic product growth (GDPG) has a significantly negative relationship with financial performance measured by EPS, but not those measured by ROA, ROE and DYIELD.
VL  - 3
IS  - 3
ER  -

Copy | Download