The Impact of Capital Structure on Financial Performance of Palestinian Listed Companies
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Abstract
The study aims to demonstrate the impact of capital structure of listed companies in Palestine Stock Exchange (PSE) on their performance. It used quantitative analysis to exam hypotheses of study, where it was used Multiple Linear Regression Model and other statistical tests. The sample of study consist of the financial reports of 34 companies that are listed in PSE during 2007 – 2015, where it is excluded the financial institutions. The study found that there is positive significant relationship between capital structure, age of firm, growth of firm, assets turnover of Palestinian corporation and return on assets (ROA). While there is an inverse relationship between the debt ration ratio on ROA after excluding ownership and debt percentages. As well as, many of Palestinian listed companies (74%) depend for financing their capital structure by proprietary, where this confirms the stability of companies in financing by proprietary. The study suggested that the corporation need to be awareness in the importance of risk of the decisions that related to choosing the optimal capital structure in order to improve financial performance in maximizing the value of the company.
Keywords
capital structure, financial performance, listed companies, Palestinian stock exchange, financing sources.
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