Hashem Alshurafat

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.

This study aimed to examine the impact of a firm’s total accruals and operating cash flows on future profitability (one-year-ahead ROA) using a static model on unbalanced panel data for all the (15) banks and (18) insurance companies listed on the Amman Stock Exchange from 2002 to 2019. The final sample of the study, for analysis, consisted of 280 observations taken from the banking sector and 410 observations from the insurance sector. The pooled sample of banks’ observations showed no significant impact of a firm’s total accruals and operating cash flows on one-year-ahead ROA. This result is consistent with previous studies’ results, which are still under debate, especially in developed countries. The investors of the Jordanian banks are not counting on the accrual earnings components, which are affected by the different estimation procedures of GAAP and managerial discretion. The pooled sample of the insurance companies’ observations showed a significant impact of a firm’s total accruals and operating cash flows on one-year-ahead ROA. The result showed a higher variable value of a firm’s operating cash flow than the firm’s total accruals for the pooled sample of insurance companies. This result indicates a more incrementally negative relation between the growth in operating assets and a one-year-ahead ROA in addition to the probable impact of the lower rate of economic profits and the conservative bias in accounting.