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
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- EP ID EP442175
- DOI 10.15208/beh.2018.44
- Views 99
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