Does Leverage Matter? Investigating The Impact Of Investment Efficiency On Firm Performance In Saudi Arabia

This study investigates the impact of investment efficiency on firm performance, with a particular focus on the moderating role of leverage in the context of the Saudi Stock Exchange. Utilizing a panel dataset comprising 496 firm-year observations from 62 non-financial listed companies between 2016 and 2023, the analysis employs fixed-effects models to estimate the relationships. The findings indicate that investment efficiency positively influences firm performance over the long term, as firms that invest efficiently in capital tend to achieve superior performance. Additionally, the results demonstrate that leverage significantly moderates the relationship between investment efficiency and firm performance. The study's originality lies in its examination of this moderating effect within the Saudi market, offering novel insights into capital structure and performance dynamics in emerging economies. The findings have practical implications for policymakers, corporate managers, and stakeholders by providing evidence-based guidance on fostering investment efficiency and leveraging financial strategies to enhance firm performance