Cash flow volatility and leverage: Evidence from non-financial Jordanian companies

Q2 Economics, Econometrics and Finance

Investment Management and Financial Innovations Pub Date : 2023-06-26 DOI:10.21511/imfi.20(2).2023.24

Mohammad Fawzi Shubita

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Abstract

This study investigates the relationship between cash flow volatility and leverage in Jordanian firms. The research purpose is to investigate whether cash flow volatility affects a company’s capital structure in Jordan. Panel data analysis is used in this study for a sample of 72 shareholder non-financial companies in Jordan from 2009 to 2020. The findings show that cash flow volatility has a significant link with leverage, indicating that companies with higher cash flow volatility tend to use more debt financing. In addition, the study finds that firm size, return on assets, and tangibility are positively associated with leverage, while growth is not significantly related. The study suggests that firms in Jordan should take cash flow volatility in consideration when making capital structure decisions. The study provides evidence that cash flow volatility is a vital determinant of leverage in Jordanian companies. The findings suggest that managers should consider the cash flow volatility effect on the capital structure alternatives of their firms. AcknowledgmentI want to thank Amman Arab University for its support.

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现金流波动和杠杆:来自约旦非金融公司的证据

本研究探讨约旦企业现金流波动率与杠杆率之间的关系。研究的目的是调查现金流波动是否影响约旦公司的资本结构。本研究对2009年至2020年约旦72家股东非金融公司的样本进行了面板数据分析。研究结果表明，现金流波动率与杠杆率存在显著关联，表明现金流波动率较高的企业倾向于使用更多的债务融资。此外，研究发现，公司规模、资产收益率和有形性与杠杆率呈正相关，而成长性不显著相关。研究建议约旦企业在资本结构决策时应考虑现金流波动。该研究提供的证据表明，现金流波动是约旦公司杠杆率的重要决定因素。研究结果表明，管理者应考虑现金流波动对公司资本结构选择的影响。我要感谢安曼阿拉伯大学的支持。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Investment Management and Financial Innovations Economics, Econometrics and Finance-Finance

CiteScore

2.50

自引率

0.00%

发文量

审稿时长

11 weeks

期刊介绍： The international journal “Investment Management and Financial Innovations” encompasses the results of theoretical and empirical researches carried out both on macro- and micro-levels, concerning various aspects of financial management and corporate governance, investments and innovations (including using of quantitative methods). It is focused on the international community of financiers, both academics and practitioners. Key topics: financial and investment markets; government policy and regulation; corporate governance; information and market efficiency; financial forecasting and simulation; financial institutions: investment companies, investment funds, investment banks, hedge funds, private pension funds; objects of real and financial investing; financial instruments and derivatives; efficiency of investment projects; econometric and statistic methods in project management; alternative investments; ratings and rating agencies.