The Impact of Growth Opportunities on the Relationship Between Capital Structure and Firm Value: A Comparative Study

This paper examines the association between the structure of capital and corporate value using indicators of growth potential, such as operating cash flow growth rates, investing cash flow growth rates, financing cash flow growth rates, sales growth rates, and fixed assets growth rates. The study adopts a comparative methodology to study Iraqi and Jordanian industrial firms. Between 2013 and 2024, a sample of industrial firms was evaluated using data from the Iraq and Amman Stock Exchanges. The sample includes nine listed Iraqi industrial firms and ten listed Jordanian industrial firms. According to the results, most growth potential indicators act as mediators between capital structure and business value. Firms with growth potential are more cautious in their use of debt, fearing that the pressure of interest and principal repayments, both of which will persist if the company's projects fail to meet performance expectations, will hinder their ability to capitalize on future investment opportunities. The results demonstrate that while capital structure has no significant impact on firm value, firms should focus on enhancing their growth potential, which has a significant negative impact on firm value. This suggests that industrial firms in developing countries should prioritize growth-enhancing strategies to enhance overall firm value. The paper analyzes the disparity in growth prospects across firms, ownership structure, and firm size for firms listed on the Iraqi and Omani stock exchanges, selected based on their size, highlighting the economic disparities between the two countries.