Moderating effect of competitive strategies on the relation between financial leverage and firm performance: evidence from Jordan
Journal Title: Business and Economic Horizons - Year 2018, Vol 14, Issue 3
Abstract
This study examined the moderating role of competitive strategy in the relationship between financial leverage and performance of firms based on a sample of industrial firms in Jordan between 2007 and 2016. The interaction between competitive strategy and financial leverage was revealed to influence the effects of financial leverage towards the performance of firms in terms of return on assets (accounting-based measure) and market-to-book ratio (market-based measure). Conclusively, obtained results are in line with the notion that firms that employ cost leadership strategy experience tax advantages and increased efficiency through debt financing and/or debt covenants. This study extends the overall understanding on the effects of financial leverage towards performance of firms and how this relationship is moderated by competitive strategy among firms in an emerging market such as Jordan.
Authors and Affiliations
Mahmoud Al-Rdaydeh, Ammar Yaser Almansour, Mohammad Ahmad Al-Omari
Keywords
Related Articles
- EP ID EP442175
- DOI 10.15208/beh.2018.44
- Views 100
- Downloads 0
Long-term memory in Euronext stock indexes returns: an econophysics approach
The purpose of paper is to assess the long-term memory of stock index returns in the pan-European platform Euronext (CAC-40, AEX, BEL-20 and PSI-20). We find evidence of time dependency in much of the data, suggesting th...
An analysis of the relationship between foreign direct investment (FDI), political risk and economic growth in South Africa
A country’s political stability and trends in economic growth are important factors to attract foreign investment. Most developing countries struggle to achieve political stability and high levels of growth. Due to these...
Moderating effect of competitive strategies on the relation between financial leverage and firm performance: evidence from Jordan
This study examined the moderating role of competitive strategy in the relationship between financial leverage and performance of firms based on a sample of industrial firms in Jordan between 2007 and 2016. The interacti...
Shareholder’s involvement in the audit committee, audit quality and financial reporting lag in Nigeria
The purpose of the present study is twofold, to investigate the entrepreneurial intent of the university students, under consideration, and to chalk out with the factors (educational) to be considered for institutional s...
Income differences, trade and Institutions: empirical evidence form low and middle-income countries
Many developing countries attained high growth rates in different periods but income differences did not reduce significantly in these periods due to increase in income inequalities. Therefore, the key objective of this...