Cash flow volatility and leverage: Evidence from non-financial Jordanian companies
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DOIhttp://dx.doi.org/10.21511/imfi.20(2).2023.24
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Article InfoVolume 20 2023, Issue #2, pp. 286-294
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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.
Acknowledgment
I want to thank Amman Arab University for its support.
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JEL Classification (Paper profile tab)G32, M41
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References33
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Tables4
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Figures0
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- Table 1. Descriptive measures
- Table 2. Pearson matrix
- Table 3. Spearman correlation matrix
- Table 4. The model
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Anis Ali
doi: http://dx.doi.org/10.21511/ppm.18(2).2020.03
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Sarwar Uddin Ahmed ,
Samiul Parvez Ahmed ,
Ikramul Hasan
doi: http://dx.doi.org/10.21511/bbs.13(3).2018.07
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Patrick Wijaya Tjoek , Pei-Ing Wu
doi: http://dx.doi.org/10.21511/ee.09(1).2018.01
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