The Impact of Leverage on Stock Earnings: The Case of the Abu Dhabi Stock Market

Authors

  • Khaled Mili King Faisal University; Saudi Arabia.
  • Ismail Bengana King Faisal University; Saudi Arabia.
  • Fatiha Guenaoua Ouargla University, Algeria.
  • Zakaria Khedir Ouargla University, Algeria.
  • MAGDY ELSAYED Tork King Faisal University; Saudi Arabia.
  • Osman Elwasila E. Idress King Faisal University; Saudi Arabia.

DOI:

https://doi.org/10.53935/jomw.v2024i4.542

Keywords:

Abu Dhabi Stock Market, Leverage, PANEL Models, Stock Earnings, Value at Risk (VaR).

Abstract

This study investigates the relationship between leverage and stock earnings in the Abu Dhabi stock market from 2006 to 2015, employing a time series computed tomography (CT) scan methodology. The dependent variable, earnings per share (EPS), is analyzed concerning various leverage ratios, including the Debt-to-Assets Ratio (DA), Debt-to-Property Ratio (DP), Long-Term Debt-to-Assets Ratio (LDA), and Long-Term Debt-to-Property Rights Ratio (LDP). Our findings reveal a positive effect of the DP ratio on leverage, while a negative impact is evident with the LDP ratio. Through a static analysis model, the study elucidates the short-run effects of leverage on earnings, characterized by the ratio of total debt to ownership using autoregression vectors. These insights enhance our understanding of the intricate relationship between leverage and stock earnings in the Abu Dhabi stock market.

Downloads

Published

2024-12-31

Issue

Vol. 2024 No. 4 (2024)

Section

Articles