The Capital Structure Impacts on Firms’ Performances the Case of Jordanian Insurance Firms

Proceedings of ‏The 10th International Conference on Modern Research in Management, Economics and Accounting

Year: 2020

DOI:

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The Capital Structure Impacts on Firms’Performances the Case of Jordanian Insurance Firms

Dr. Ahmed Al Omush

 

ABSTRACT: 

This study seeks to investigate the impact of capital structure on firm performance by analyzing
the relationship between the operating performance of Insurance companies listed in the Amman
Stock Exchange during the period 2014- 2019, measured by return on asset (ROA) and return on
equity (ROE) with short-term debt (STD), long-term debt (LTD) and total debt (TD). To examine
the association, across sectional data and pool data analysis were used. The study has shown a
positive relationship between short term debt and return on equity and a negative correlation
between long term debt and return on investment. Therefore suggesting that Insurance sector
utilize more short term debt because of low-interest expenses and most Insurance companies suffer
losses because using excessive long term debt and a large amount of financial cost. Thus Insurance
companies firms utilize debt, but more portion of financing should be through short term debt
(STD) and long-term debt (LTD) in less proportion. .

Keywords:Capital Structure, Operation Performance, Insurance sector, Debt.

Dr. Ahmed Al Omush

The Hashemite University, Accounting Department

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