The Impact of Capital structure on Financial Performance of Investment Firms listed in Palestine Exchange: The Moderating Role of Firm's Size

Abstract

The study aimed at investigating the impact of capital structure on financial performance of investment firms listed in Palestine Exchange (PEX) and aimed at exploring the moderating role of firm's size in that relation. The study sample is (10) companies listed in the years (2012-2021). The study included performing correlation test and multiple regression test by using Panel Data of (100) observations. The study found that random effect test was the most appropriate for the data and found the significant positive effect of liquidity and marginal profit on financial performance while the effect was not significant for total debt, short-term debt and tangibility. The study found that the firm's size plays a moderating role in the relation between capital structure and financial performance. The study recommended investment companies listed in (PEX) to increase the portion of debt to equity in capital structure mix, maintaining high levels of liquidity, decreasing operational and financial expenses and to rely on firm's size while financing by loans.