The effect of a firm’s internal factors on its profitability: Evidence from Jordan
Open Access
- 17 May 2021
- journal article
- Published by LLC CPC Business Perspectives in Investment Management and Financial Innovations
- Vol. 18 (2), 130-143
- https://doi.org/10.21511/imfi.18(2).2021.11
Abstract
The aim of this study is to investigate the effect of a firm’s size, asset growth, asset tangibility, and financial leverage on profitability for all listed corporate firms in Jordan using unbalanced panel data (time series and cross-sectional) regression analysis for a sample of 1,663 observations over the period from 2011 to 2018. The overall results show a significant positive effect of a firm’s size and asset growth on profitability. However, asset tangibility presents a significant negative effect on profitability, while financial leverage has an insignificant positive effect on profitability. An analysis of each of the main sectors also point to a consistently positive effect of a firm’s size on profitability, while the results for growth in assets and financial leverage are nearly consistent with overall findings, but not those for asset tangibility. Furthermore, the sub-sample industry analysis reveals mixed results due to the different industry shapes and structures. This study is expected to be of value to firm managers, investors, researchers, and regulators.Keywords
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