The Impact Of Capital Structure And Profitability On Share Price: Empirical Study (Based On Jordanian Traditional Banks)

The aim of this paper is to investigate the possible association among profitability evaluated ROA and ROE and capital structure, represented by the debt ratio and debt to equity ratio with the share price of Jordanian banks. The chosen sample consists of 7 traditional banks operating in Jordan, and panel data analysis is utilized to examine the period spanning from 2015 to 2019. The model employed to analyze data is the fixed effect model. This study relied on (ROA, ROE, DR and DER) as independent variables, whereas the share price as dependent variable. The results reached reveal that a negative influence of debt ratio exists on Jordanian banks' share price, while positively impacted by ROA and ROE, however, DER has insignificant influence on share price that traded by Jordanian banks. The outcomes presented above align with the prevailing literature reviews included in this study, confirming the theoretical discussions concerning the interplay between capital structure, profitability, and share price.