The Nexus between Capital Structure and Firm Value by Profitability Moderation: Evidence from Saudi Arabia

• 영문명: The Nexus between Capital Structure and Firm Value by Profitability Moderation: Evidence from Saudi Arabia
• 발행기관: 한국유통과학회
• 저자명: Nadeem FATIMA Abdul Rahman SHAIK
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 9 No.9, 181~189쪽, 전체 9쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2022.10.31

영문 초록

The current study examines the nexus between the capital structure (debt-equity) and firm value (Tobin’s Q) by including profitability (alternatively Return on Assets (ROA) and Return on Equity (ROE)) as a moderator in the companies of Saudi Arabia. The study sample consists of 102 companies listed on Tadawul (the Saudi Arabian stock exchange) from different sectors of Saudi Arabia during the period 2013 to 2020. The study estimates pooled regression, panel regression with fixed and random effects, and dynamic panel regression models to report the results. The study results report that there is a negative and significant association between capital structure and firm value in model 1, while in models 2 and 3 there is a more negative and significant impact between the two study variables compared to model 1 after the inclusion of interaction variable, i.e. profitability in terms of ROA and ROE. The comparative result shows that the companies of Saudi Arabia hold more debt in their capital structure mix, hence evidencing a decrease in the firm value. The reported results also show that models 2 and 3 are better in explaining the impact of capital structure on firm value due to the interaction of profitability compared to model 1.

목차

1. Introduction

2. Literature Review

3. Data and Methods

4. Results

5. Discussion

6. Conclusion

References

키워드

Capital Structure Firm Value Return on Assets Return on Equity Moderation