The descriptive statistics tables are provided in the appendix and the first one is for the banks data and the rest of the tables are for the non-financial firms data. First, the banks table shows that the book leverage ratios in the banks of the MENA coun- tries are considered to be lower in comparison to the sample of Gropp and Heider (2010). However, the market leverage is higher for the developed banks sample. Profitability is higher in the MENA sample.
In this section the mean of total debt in book value and market value is analysed. As these two measures include the short term and long term debt. First, As Table A.14 show the descriptive statistics for all the countries in this study sample. The mean for the book value total debt is 18% and for the market value total debt is 20%. It is notable that the countries leverage ratio means are in the range from 14% to 27% in book values and between 16% and 31% in market value with the exception of Bahrain where leverage means are low. The countries which are less that the MENA average are Bahrain, Egypt, Jordan, Kuwait, Palestine, Qatar and UAE. The rest of the countries are above the average with Tunisia and Oman have the high- est leverage ratios in this sample. It worth mentioning that the leverage ratios in the MENA countries are very low in comparison to other developed countries. For example, Booth et al. (2001) present a descriptive table showing the ratios in devel- oped and developing countries and it shows that debt is above 30% in developed countries and above 50% for developing countries.
This thesis use six profitability ratios but for comparison reasons this section will compare using one ratio which is the operating income to total assets. First, as stated in the tables in Appendix A.1 the mean of the profitability ratio for the MENA countries is 6.2%. This average is considered to be low as well in comparison to the developed world as shown by Wald (1999) study where countries such as the US
have a mean profitability of 7.1%. The countries in the MENA countries could be classified to countries with low profitability mean such as Bahrain, Jordan, Kuwait and Qatar, and countries with high profitability in comparison to the mean such as Egypt 8.9%, Morocco 11% and Saudi Arabia 8.2%.
The liquidity measure this study use is the current ratio which is the current assets to current liabilities. As the tables in Appendix A.1 show countries in the MENA countries are in good condition in terms of liquidity. The mean for the MENA coun- tries is 2.6 which indicate that firms have two times and half the current liabilities in current assets. Overall the countries in the sample are within the same range with the exception of Morocco where the liquidity ratio is low with 1.89. De Jong et al. (2008) study present a descriptive statistics and comparing to that we could see that countries in the MENA region are in same range with developed economies if not better in some cases.
The ratio used to present volatility is the standard deviation of the share price. Other studies used the standard deviation of the operating income which is not possible in this study due to lack of quarterly data. The mean of the MENA countries risk measures is %49. Countries with a volatile market in the sample where Kuwait and UAE which an average percentage of 69% and 59%. Size is defined as the logarith- mic of sales. The countries in the sample are in the range between 16 and 19. Two widely used ratios to represent the size are the logarithmic of total assets where the range is between 5 and 10 and the logarithmic of sales where the range is between 16 and 19. This study used the logarithmic of sales because of high correlations for the log of total assets. Tangibility is defined as the net fixed assets to total assets and it is a measure of how much of the firms assets are fixed assets. The mean of the MENA countries is 26%. Which is considered to be high in comparison to the US and the UK in De Jong et al. (2008) study where the mean is 14% and 8% respectively. Furthermore, we notice that Bahrain, Jordan Oman and UAE have a
higher mean than the other countries in the sample where the mean is higher than 30%.
The non-debt tax shield is a measure of the tax benefit a firm can take advantage of when using debt. It is defined as the depreciation and amortization expense to the total assets. The MENA countries average is 2.6% which is considered low when compared to the developed countries such as Wald (1999). The countries in the sample are in the rate of 2% to 3%. Except Bahrain, Morocco and Palestine which are lower than that. On the other hand, Qatar and Oman have a high percentage with 4.7% and 5.6% respectively.
Dividends is defined as the dividends payment amount to the total assets. On av- erage, the MENA firms pay 2.9% out of the total assets in dividends. As the tables in Appendix A.1 show Tunisia and Jordan are the lowest in the sample with an average of 1.8% and 1.5% respectively. On the other hand, Bahrain, Qatar and Saudi Arabia are the highest in the MENA countries with 4.1% and 4.5% and 4.1% respectively. Growth opportunities variable is defined as the average percentage of yearly growth for the last eight years. As the tables in Appendix A.1 show the growth rate for the MENA countries which is 0.4%. All the countries in the sample are within the same range with the exception for Qatar in which it is 0.8%.