Determinants of capital structure: An application in Jordan industrial companies

The aim of this study is to determine the internal factors that affect the capital structure decisions of industrial companies operating in Jordan. In the study, panel regression analysis was conducted using the data of 28 companies operating in Jordan between 2005 and 2020. The findings obtained in the study revealed that the increase in asset size increases the ratio of total debt to assets, while the increase in return on assets, return on equity, growth in sales, asset turnover and receivables turnover decreases the ratio of total debt to assets. The results of the model created for the ratio of short-term debt to total assets show that the increase in assets and the increase in asset turnover increase the short-term debt ratio, whereas increase in the return on assets, return on equity, growth in sales, tangible assets to total assets ratio and receivables turnover decrease the short-term debt ratio. Finally, the findings indicate that the increase in the asset size and the ratio of tangible fixed assets to assets increases the long-term debt ratio, but the increase in the return on assets, asset turnover and receivables turnover reduces the long-term debt ratio.