The Effect of Operational Efficiency on Firm Capital Structure. Applied on the Real Estate Sector

نوع المستند : المقالة الأصلية

المؤلفون

1 قسم الإدارة - كلية التجارة وإدارة الأعمال - جامعة حلوان

2 كلية التجارة وإدارة الأعمال

المستخلص

The study examines the impact of operational efficiency (OE) on the firm’s capital structure (CS) through some moderating variables applied to the Real Estate sector in Egypt. A panel data has been conducted to analyze and test 28 most active real estate companies in the Egyptian stock exchange (EGX) during the period 2016 to 2022 using descriptive, correlation and regression methods. The study findings showed that there is a significant negative effect of fixed asset turnover (FAT) on debt-to-assets through the operating cash flow (OCF). Furthermore, there is a significant negative effect of Rec. turnover on debt-to-assets. And a negatively significant effect of TAT on debt-to-capital occurred as well. On the contrary, there is a positive effect of OCF on debt-to-assets. While the effect of all activity measures of operational efficiency on debt-to-equity, equity multiplier, and proprietary ratios found insignificant. The board of directors should establish a proper agreement with the shareholders about the firm’s financing methods before applying any efficiency processes. Also, to avoid spending money anonymously before checking the country’s rules and regulations first. The study recommends further investigation on the effect of operational efficiency on firms’ capital structure on different sectors, also should include more variables such as liquidity, profitability, firm size, and firm performance.

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