The impact of liquidity and leverage on financial performance of public listed firms in Jordan

Mohammad Alshakhanbeh and Anwar Allah Pitchay and Md Aslam Mia and Rami Nairoukh and Mohamad Isa Abd Jalil (2024) The impact of liquidity and leverage on financial performance of public listed firms in Jordan. International Journal of Academic Research in Accounting, Finance and Management Sciences, 14 (4). pp. 1276-1299. ISSN 2225-8329

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Abstract

This study investigates the impact of liquidity and leverage on the financial performance of public listed service firms in Jordan, offering insights into financial management in emerging economies. Using data from 38 service companies listed on the Amman Stock Exchange (2011–2021), the analysis focuses on financial metrics such as Current Ratio (CR), Cash Ratio (CHR), Quick Ratio (QR), Short-Term Debt (SD), Long-Term Debt (LD), Debt to Equity (DTE), and Earnings Per Share (EPS). Partial Least Squares Structural Equation Modeling (PLS-SEM) with PLS-SMART 4.1 was employed to analyze the data. The findings reveal that liquidity, particularly CR and CHR, positively influences financial performance, supporting the Pecking Order and Agency Cost Theories, while QR shows no significant impact. High leverage, especially LD and DTE, negatively affects performance, though SD has a positive relationship with EPS, aligning with the Trade-Off Theory. Control variables like Capital Intensity and Firm Size also significantly influence EPS, while Trading Volume and Firm Age do not. The study is limited to Jordanian service firms, and the findings may not apply to other sectors or regions. This research contributes to understanding financial management practices in emerging economies, offering valuable guidance for policymakers and managers to enhance financial sustainability and competitiveness.

Item Type:	Article
Keyword:	Liquidity, Leverage, Financial Performance
Subjects:	D World History and History Of Europe, Asia, Africa, Australia, New Zealand, Etc. > DS Asia > DS1-937 History of Asia > DS153-154.9 Jordan. Transjordan H Social Sciences > HG Finance > HG1-9999 Finance > HG1501-3550 Banking > HG1811-2351 Special classes of banks and financial institutions
Department:	FACULTY > Faculty of Business, Economics and Accounting
Depositing User:	SITI AZIZAH BINTI IDRIS -
Date Deposited:	24 Feb 2025 11:07
Last Modified:	24 Feb 2025 11:07
URI:	https://eprints.ums.edu.my/id/eprint/42948

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