Title: Capital structure, tax effect, financial crisis and default risk: evidence from emerging market

Authors: Rami Zeitun; Hisham Al Refai

Addresses: Department of Finance and Economics, College of Business and Economics, Qatar University, Qatar ' Department of Finance and Economics, College of Business and Economics, Qatar University, Qatar

Abstract: The central objective of this study is to investigate the effect of capital structure on corporate failure in the emerging market, in particular Jordan, using a panel data analysis sample representative of 180 Jordanian companies during the period 1990 to 2012. This paper also examines the effect of the financial crisis 2008 on Jordanian corporate insolvency. The level of corporate leverage was found to have a positive effect on the probability of default (PD). Firms with lower bankruptcy costs have a lower probability of default (PD).

Keywords: capital structure; default risk; financial crisis; Jordan.

DOI: 10.1504/IJEBR.2017.085557

International Journal of Economics and Business Research, 2017 Vol.14 No.1, pp.104 - 113

Received: 22 Mar 2016
Accepted: 19 Sep 2016

Published online: 14 Jul 2017 *

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