Leverage determinants in the absence of corporate tax system: the case of non‐financial publicly traded corporations in Saudi Arabia

Reviews previous research on the factors affecting the proportions of debt and equity used to finance firms, describes the Saudi Arabian tax system (based on net worth) and stock market; and examines the capital structure 1993‐1997 of a sample of 35 publicly traded Saudi companies. Uses multi‐linear regression models to investigate the relationships between capital structure and other variables in 5 sectors and illustrates their varied leverage ratios. Discusses and analyses the positive links between leverage ratios, firm size and share of government ownership; and negative links with growth, return on assets and profitability margin.