The role of debt financing in the relationship between capital structure, firm’s value, and macroeconomic factors: To throw caution to the wind

Misbah Sadiq, Sheikh Usman Yousaf, Muhammad Khalid Anser, Haroon ur Rashid Khan, Sriyanto Sriyanto, Khalid Zaman, Duong Van Tu and Siti Nisrin Mohd Anis

The Quarterly Review of Economics and Finance, 2023, vol. 87, issue C, 212-223

Abstract: The role of debt in capital structure and firms' performance has a great novelty in reducing market imperfections that improve firms' value. This study integrated the qualitative and quantitative aspects of capital structure and firms' performance in 56 stock exchange-listed companies of Jordan by using the time series data from 2012 to 2016. The results confirmed the "stewardship theory," "pecking order theory," and "concentrated ownership theory," while contractionary monetary instruments diffuse the recessionary phase in a country. The results confirmed a U-shaped relationship between debt and Tobin's Q in mediation with the country's per capita income. In contrast, an inverted U-shaped relationship found between market capitalization and a firm's performance in intervention with domestic credit provided by the financial sector (DCPFS). These results are essential in the light of CG theories to stabilize the firm's internal and external issues, which are further optimized by government financial agencies to energize macroeconomic policies for sustained growth.

Keywords: Capital structure; Corporate governance; Firm’s performance; Debt; Macroeconomic factors; Jordan economy (search for similar items in EconPapers)
JEL-codes: C33 G20 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062976920301563
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:87:y:2023:i:c:p:212-223

DOI: 10.1016/j.qref.2020.11.001

Access Statistics for this article

The Quarterly Review of Economics and Finance is currently edited by R. J. Arnould and J. E. Finnerty

More articles in The Quarterly Review of Economics and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().