This thesis examines the determinants of corporate performance and likelihood of default of Jordanian publicly listed companies. Despite the large body of work that has investigated the determinants of corporate performance and default, no comprehensive study has emerged in an emerging market. Indeed, most of the empirical research on corporate performance and failure has been conducted in the developed markets such as the USA and the UK. This is the first rigorous and comprehensive study to examine empirically the determinants of corporate performance and failure of the publicly listed companies in an emerging market of Jordan. Also, it is the first study to present evidence on the determinants of corporate performance and failure in the Jordanian market using microeconomic and macroeconomic variables. Another objective of the research is to investigate the effect of the two financial systems on corporate health, since two banking systems operate in Jordan. It is also the objective of this thesis to investigate the effects of external shocks on Jordanian corporate performance and failure, especially those occurring within the Middle East region such as the Gulf Crisis 1990-1991 and the outbreak of the Intifadah in September 2000. Our study uses time-series and cross-sectional data of the publicly traded companies on the Amman Stock Exchange over the period 1989-2003. The study examines the determinants of capital structure and corporate performance using the random effects model and the pooled ordinary least squares (OLS) regression method. The study also examines the determinants of corporate failure (default) using the Logit model. A firm’s tangibility is found to have a positive and significant impact on a firm’s capital structure, while it has a negative impact on the short-term debt to total assets ratio. Firm profitability, liquidity, and stock market activity are found to have a negative and significant impact on a firm’s capital structure. The analyses show that a firm’s capital structure is negatively and significantly related to corporate performance, but positively and significantly related to its failure. The Gulf Crisis 1990-1991 had a positive impact on corporate performance, while the outbreak of Intifadah had a negative effect on corporate performance. The study also highlighted the importance of industrial sectors in determining corporate performance. Ownership concentration measured by the largest five shareholders was found to be positively and significantly related to corporate failure in both the cross-sectional sample and the panel data sample. The analysis also found that there is a non-linear relationship between a firm’s performance value and ownership structure. Another important finding is that Islamic banks' credit has an important and significant impact in increasing a firm’s performance measure return on assets (ROA). Unexpected changes in interest rates are found to be negatively and significantly related to corporate default (failure). This implies that corporate performance and distress, or insolvency, are affected by their capital structure, ownership structure, cash flow, and macroeconomic variables. / Doctor of Philosophy (PhD)
| Identifer | oai:union.ndltd.org:ADTP/205677 |
| Date | January 2006 |
| Creators | Zeitun, Rami M. A., University of Western Sydney, College of Law and Business, School of Economics and Finance |
| Source Sets | Australiasian Digital Theses Program |
| Language | English |
| Detected Language | English |
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