The effect of a firm’s internal factors on its profitability: Evidence from Jordan
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DOIhttp://dx.doi.org/10.21511/imfi.18(2).2021.11
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Article InfoVolume 18 2021, Issue #2, pp. 130-143
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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.
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JEL Classification (Paper profile tab)G30, G32
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References57
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Tables10
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Figures0
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- Table 1. The selected sample
- Table 2. Study variables and their measurement
- Table 3. Summary statistics
- Table 4. Multicollinearity analysis
- Table 5. Hausman’s test results
- Table 6. Determinants of firms’ profitability: pooled data and the three main sectors
- Table 7. Regression analysis for the financial sector
- Table 8. Regression analysis for the industrial sector
- Table 9. Regression analysis for the services sector
- Table 10. Determinants of firms’ profitability: pooled data using market variables
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