Determinants of the financing structure and their impact on the financial efficiency of joint stock industrial companies

Abstract

The current study aims to test the relationship between the determinants of financing structure as an independent variable and financial efficiency as a dependent variable for joint stock industrial companies. As it was relied on a set of determinants of the financing structure, which are represented by tangible assets, profitability, company size, growth opportunities, effective tax rate, tax reduced items excluding interest, while the financial efficiency was measured on several indicators, which are represented by the turnover rate of total assets, the rate of Accounts receivable turnover, accounts payable turnover rate, working capital turnover rate, inventory turnover rate. As several hypotheses were imposed and a set of questions related to the study was developed, and in order to achieve the objectives of the study, the hypotheses were tested for a sample of industrial joint stock companies listed in the Iraq Stock Exchange, based on the data of the official website of the Iraqi Stock Exchange for the period of time (2011-2020), The sample included (8) joint stock industrial companies. Some financial and statistical indicators were relied upon to analyze and discuss the results by adopting the method of multiple regression analysis among the indicators according to the statistical program (Eviews v.9) and the statistical program (SPSS v23).

The study reached a set of conclusions, the most important of which is the difference in the determinants of the financing structure from one company to another as a result of the difference in its age and size and the different orientation of the departments, in addition to the fact that the optimal financial structure reflects positively on the financial efficiency if it is invested in an optimal manner, and accordingly the study recommended several recommendations that can be Companies adopt and take advantage of them.