Capital Structure of Insurance Companies in Bahrain

The impact of firm characteristics on the capital structure of the insurance industry in Bahrain is nowadaysconsidered to be an important issue. Many insurance companies don't know what factors affect their capitalstructure, making ad-hoc, and sometimes inappropriate, decisions regarding their financial mix. We attempt tohighlight the critical firm characteristics that managers should consider when setting their “optimal” capitalstructure.Our study is based on a multiple linear regression analysis using SPSS. Each independent variable along with thedependent variable is measured separately for a sample of insurance companies in Bahrain for the period of2005-2009.Our research identifies a strong relationship between firm characteristics, such as (1) Tangibility of Assets, (2)Profitability, (3) Firm Size, (4) Revenue Growth, and (5) Liquidity, and observed capital structure, as representedby the Debt Ratio, although Profitability and Revenue Growth are not statistically significant and require furtherresearch.