Capital structure and profitability in a tax-free country: evidence from the UAE
The balance between debt and equity is a key factor explaining profitability. This study examines how capital structure affects the profitability of firms listed on stock exchanges in the United Arab Emirates (UAE), a country that does not have a federal corporate income tax regime. The proxies of c...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Inderscience Enterprises Ltd.
2020
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| Subjects: | |
| Online Access: | http://umpir.ump.edu.my/id/eprint/30419/1/Capital%20structure%20and%20profitability%20in%20a%20tax1.pdf |
| _version_ | 1796994425377783808 |
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| author | Tebourbi, Imen Irene, Wei Kiong Ting Qian, Long Kweh Al Huseini, Harith Ali Hamood |
| author_facet | Tebourbi, Imen Irene, Wei Kiong Ting Qian, Long Kweh Al Huseini, Harith Ali Hamood |
| author_sort | Tebourbi, Imen |
| collection | UMP |
| description | The balance between debt and equity is a key factor explaining profitability. This study examines how capital structure affects the profitability of firms listed on stock exchanges in the United Arab Emirates (UAE), a country that does not have a federal corporate income tax regime. The proxies of capital structure used include total, short-term, and long-term debt ratios, while those of profitability are return on assets and return on equity. Over a 2001-2016 sample period, this study documents a significantly negative association between capital structure and profitability. This study finds that the negative association is mainly found in companies with a high level of debts. The results of this study not only imply that information asymmetry exists, they also highlight how capital structure and profitability are associated in the context of a corporate tax-free country. |
| first_indexed | 2024-03-06T12:47:37Z |
| format | Article |
| id | UMPir30419 |
| institution | Universiti Malaysia Pahang |
| language | English |
| last_indexed | 2024-03-06T12:47:37Z |
| publishDate | 2020 |
| publisher | Inderscience Enterprises Ltd. |
| record_format | dspace |
| spelling | UMPir304192022-05-25T02:47:06Z http://umpir.ump.edu.my/id/eprint/30419/ Capital structure and profitability in a tax-free country: evidence from the UAE Tebourbi, Imen Irene, Wei Kiong Ting Qian, Long Kweh Al Huseini, Harith Ali Hamood HF Commerce The balance between debt and equity is a key factor explaining profitability. This study examines how capital structure affects the profitability of firms listed on stock exchanges in the United Arab Emirates (UAE), a country that does not have a federal corporate income tax regime. The proxies of capital structure used include total, short-term, and long-term debt ratios, while those of profitability are return on assets and return on equity. Over a 2001-2016 sample period, this study documents a significantly negative association between capital structure and profitability. This study finds that the negative association is mainly found in companies with a high level of debts. The results of this study not only imply that information asymmetry exists, they also highlight how capital structure and profitability are associated in the context of a corporate tax-free country. Inderscience Enterprises Ltd. 2020 Article PeerReviewed pdf en http://umpir.ump.edu.my/id/eprint/30419/1/Capital%20structure%20and%20profitability%20in%20a%20tax1.pdf Tebourbi, Imen and Irene, Wei Kiong Ting and Qian, Long Kweh and Al Huseini, Harith Ali Hamood (2020) Capital structure and profitability in a tax-free country: evidence from the UAE. Afro-Asian Journal of Finance and Accounting, 10 (3). pp. 430-444. ISSN 1751-6455. (Published) https://dx.doi.org/10.1504/AAJFA.2020.108257 https://dx.doi.org/10.1504/AAJFA.2020.108257 |
| spellingShingle | HF Commerce Tebourbi, Imen Irene, Wei Kiong Ting Qian, Long Kweh Al Huseini, Harith Ali Hamood Capital structure and profitability in a tax-free country: evidence from the UAE |
| title | Capital structure and profitability in a tax-free country: evidence from the UAE |
| title_full | Capital structure and profitability in a tax-free country: evidence from the UAE |
| title_fullStr | Capital structure and profitability in a tax-free country: evidence from the UAE |
| title_full_unstemmed | Capital structure and profitability in a tax-free country: evidence from the UAE |
| title_short | Capital structure and profitability in a tax-free country: evidence from the UAE |
| title_sort | capital structure and profitability in a tax free country evidence from the uae |
| topic | HF Commerce |
| url | http://umpir.ump.edu.my/id/eprint/30419/1/Capital%20structure%20and%20profitability%20in%20a%20tax1.pdf |
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