Date of Conferral

4-10-2024

Date of Award

April 2024

Degree

Ph.D.

School

Management

Advisor

Danielle Babb

Abstract

Financial performance has been an ongoing challenge for real estate companies in Egypt due to the devaluation of the currency in 2016, an increase in interest rates, and inflation that led to an increase in the price of construction inputs, plus the effect of COVID-19 on the local and world economy. The purpose of this quantitative correlational study was to examine the relationship between company capital structure and the financial performance of real estate companies in the Egyptian exchange during the years 2016 to 2020. The research questions focused on the effects of capital structure. Three financial performance measures, return on assets (ROA), return on equity (ROE), and return on investment (ROI), were dependent variables, and three capital structure measures: short-term debt to total assets, long-term debt to total assets (LTDTA), and total debt to total assets were independent variables. Size and growth were also control variables. Financial Data encompassing 2016 to 2020 were collected and analyzed for 25 Egyptian real estate companies. The regression analysis showed significant negative correlations between ROA and various debt ratios but no significant correlation between ROE and debt ratios. The finding of a negative correlation between ROI and LTDTA indicates that higher levels of long-term debt were associated with lower ROI. No significant correlation was found between the three financial measures and growth and size as control variables. This study illustrates the importance of maintaining a prudent level of leverage to avoid the adverse effects of excessive debt on a firm's financial performance. This insight may help the leaders of Egyptian real estate firms avoid employment losses and business failures.

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