How Financial Performance of Palestine Exchange Firms is Affected by Capital Structure رسالة ماجستير

Abstract

For an ideal capital structure, it’s essential to select between the two financing forms, either equity or debt. The study conducted to examine how the Palestine exchange listed firms are affected by the capital structure in terms of financial performance, which directed its objective toward studying the influence of capital structure of the listed non-financial companies on Palestinian exchange (PEX) on their financial performance. Return on assets and return on equity indices were used as indicators of performance, while debt ratios to measure capital structure. All the 35 non-financial out of 49 firms listed in the PEX was the sample of the study; securities exchange website and firm’s publication were used as a source of data. Data analysis done using Correlation, descriptive analysis and multiple regression. The study found that the financial performance of listed firms has affected negatively, where the study showed that return on assets and return on equity is reduced as a result of increased debt, where debt benefits are lower than their cost. In addition, the study observed that Palestinian non-financial companies are financed either by short-term liabilities, or equity, or mix of both as long-term liabilities are relatively low. The study recommended that non-financial firms and policy makers should rely less on short term debt, which formed the major part of their leverage and focus more on developing internal strategies that can help improve more on their financial performance.