The Impact of Capital Structure on Sustainability of Industrial Companies Listed on the Palestine and Amman Stock Exchanges for the Period 2013-2023
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Date
2025-12-09
Authors
عطاف بيره
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Publisher
جامعة النجاح الوطنية
Abstract
The main goal of this study is to investigate the influence of Capital Structure (CS) on sustainability in industrial companies listed in the Palestine Exchange (PEX) and Amman Stock Exchange (ASE) from 2013 to 2023. It employs a number of controlling variables including company size, company growth, company liquidity, and board size. CS is one of the key strategic financial decisions in companies since it includes both debt and equity employed to finance activities and its direct influence in financial and non-financial performance as well as achieving strategic aims which ensures sustainability and creates more value for themselves and other stakeholders.
It depends on an integrated theatrical framework depending on many economic and managerial theories including economic and agency theory, trade-off theory, and pecking order theory, to clarify the relationship between financing decisions and sustainability requirements in its three dimensions: environment, society, and governance. It adopts qualitative approach by gathering information of (41) financial and non-financial companies listen in PEX and ASE analyzing their data using advanced statistical regression models using STATA.
It has been found that there has been an increase in equity financing which increased governance disclosure transparency as well as the negative relationship with sustainability with environmental and social one. This confirmed their ability to reduce their debt and adopt e
confirming the ability of companies that tend to reduce their debt to adopt more stable and transparent policies. However, debt financing showed that higher total long-term debt has a positive impact on environmental sustainability and a negative impact on social sustainability and governance. Higher short-term debt is associated with better social and environmental performance, and there is no clear significant evidence of the impact of short-term debt on governance.
The study included a set of control variables and showed that the size and growth of institutions are strongly positively correlated with their level of governance and environmental and social sustainability, while liquidity has a negative impact on the dimensions of sustainability, and the size of the board of directors has a positive impact on sustainability, indicating the role of governance in promoting sustainability practices.
It is concluded that capital structure is not merely an internal financing decision, but also represents a strategic tool that affects the ability of industrial companies to align their financial objectives with social and environmental commitments. It also recommends adopting balanced financing structures that reduce excessive reliance on debt and increase reliance on equity, while enhancing disclosure and transparency in financial and non-financial reporting. This will increase
investor confidence and enhance companies' competitiveness in a challenging and volatile economic environment.