The Impact of Capital Structure on the Financial Performance of Iraqi Joint-Stock Companies An Applied Study on Companies Listed on the Iraq Stock Exchange for the Period (2019–2023)

Abstract

 This study examines the impact of capital structure on the financial performance of Iraqi joint-stock companies listed on the Iraq Stock Exchange (ISX) over the period 2019–2023. Using balanced panel data for a sample of 30 industrial and banking firms, the research employs Fixed Effects Models (FEM) selected through the Hausman specification test. The debt-to-equity ratio (DER) serves as the primary independent variable, while ROA, ROE, and NPM represent performance measures. Size and liquidity are included as control variables. Results reveal a statistically significant negative effect of leverage on ROA and NPM, and a positive effect on ROE attributable to the short-run financial leverage effect. The study concludes that Iraqi firms should adopt balanced financing strategies consistent with the Pecking Order Theory.