دراسات العدد الاقتصادي
Volume 7, Numéro 2, Pages 237-258

Effect Of Financial Structure On Value Of The Company An Empirical Study On The Non-financial Companies Listed In Kuwait Stock Exchange 2010-2014

Authors : Abdelmajid Keddi . Amina Hammada .

Abstract

This study aimed to investigate the effect of financial structure on value of the company. It has sampled nineteen non-financial companies listed in Kuwait Stock Exchange during the period from 2010 to 2014. Panel data for the firms are generated and analyzed using fixed-effects, random-effects and Hausman Chi Square estimations. We used a multiple regression model to examine the relationship between a dependent variable which is the company value and independent variables which are: capital structure, profitability of the company, size of the company and company liquidity. Empirical findings indicated existence of negative and significant relationship between the company value and the capital structure; this indicates that extensive use of debt affect negatively the market value of the company, which means that companies under study are not able to realize the benefits of using debt. Also, the results show a positive and significant relationship between company value and profitability of the company. The relationship between the company value and its size is positive, and it is statistically significant, which indicates that the company uses its total assets affectively to increase its value.

Keywords

Capital structure, company value, non-financial companies, Kuwait Stock Exchange