the impact of financial structure on the company priced value Case Study a sample of the companies listed in the Saudi stock exchange during 2009-2012

Abstract

By the financing decisions the financial management is aimed to maximize the company's market value and the rationalization of the managers’ financing decisions. Accordingly, this study aims to illustrate how the decisions of the financial structure are made in a way that increases the company’s market value. Thus, we test the impact of financial structure on the value of the companies listed in the Saudi stock exchange during 2009-2012. The study covers a sample of 79 companies spread over 13 sectors. Panel data method has been used to study the relationship between the value of the company as dependent variable measured by the market value to the book value and the following independent variables: financial structure represented by three debt ratios, profitability, the company size measured by the Logarithm of total assets, growth and systemic risk). The study concluded that there is a significant relationship between the ratio of total debt to private funds, the ratio of short debt to private funds, the company size, systemic risk and the value of the company on one hand, and non significant relationship between the financial profitability, economic profitability, growth and value of the company on the other.