Overview of tested relationships against the expectations
| Concept | Expected relationship | Developed countries | Developing countries | Muslim-majority countries | Developing non-Muslim countries |
|---|---|---|---|---|---|
| Profitability | −** | − | − | − | − |
| Moral hazard | +*/** | +/− | +/− | +/− | +/? |
| Liquidity | −** | − | − | − | − |
| Size | +* | + | + | + | + |
| Market valuation | +** | + | + | + | + |
| Distance from Bankruptcy | −* | − | − | − | − |
| Financial development | − | ? | − | − | ? |
| Strength of legal rights | + | + | − | ? | ? |
| GDP growth | + | ? | + | + | ? |
| Inflation rate | − | + | ? | + | ? |
| Concept | Expected relationship | Developed countries | Developing countries | Muslim-majority countries | Developing non-Muslim countries |
|---|---|---|---|---|---|
| Profitability | −** | − | − | − | − |
| Moral hazard | +*/** | +/− | +/− | +/− | +/? |
| Liquidity | −** | − | − | − | − |
| Size | +* | + | + | + | + |
| Market valuation | +** | + | + | + | + |
| Distance from Bankruptcy | −* | − | − | − | − |
| Financial development | − | ? | − | − | ? |
| Strength of legal rights | + | + | − | ? | ? |
| GDP growth | + | ? | + | + | ? |
| Inflation rate | − | + | ? | + | ? |
Note(s): Insignificant relationships are marked with “?”, while significant relationships are shown with their signs. For Moral Hazard, we report the significance of two measures side-by-side. In the expected relationship column, * denotes prediction by the Trade-off Theory whereas ** denotes prediction by the Pecking Order Theory
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