The Analysis of Capital Structure and Performance on the Jordanian Banks’ Share Price

Abstract

The variations in capital structure and financial performance consider being main significance to evaluate the overall returns of the firms and more significant point to know whether stock returns are sensible to change in capital structure. (Khan W., et al., 2013)This study conducted to verify the relationship presence between some of capital structure signal, and performance indicators expressed by some profitability measures on the Jordanian banks’ share price over the study period which extend from 2009 to 2014. A quantitative approach was used to achieve the study objective.The study resulted in some findings summarized as follows: There is a significant impact of capital structure on Jordanian banks’ share price, as well there is a significant impact of equity ratio on Jordanian bank’s share price, and likewise there is a significant impact of debt ratio on Jordanian bank’s share price.On the other hand there is a significant impact of performance on Jordanian banks’ share price; however, there is no significant impact of return on asset (ROA) on Jordanian bank’s share price, but there is a significant impact of return on equity (ROE) on Jordanian bank’s share price.Finally, there is a significant impact of capital structure and performance on Jordanian banks’ share price.

Keywords: Share price, Equity ratio, Debt ratio, Return on asset (ROA), Return on equity (ROE), Amman Stock Exchange (ASE).