Amman Stock Exchange Research Articles

Does foreign ownership affect corporate cash holdings Evidence from Amman Stock Exchange

Does foreign ownership affect corporate cash holdings Evidence from Amman Stock Exchange

Extreme value volatility estimators and realised volatility of stock prices in Amman Stock Exchange

Extreme value volatility estimators and realised volatility of stock prices in Amman Stock Exchange

Tax ethics and tax compliance: Evidence from emerging markets

The purpose of this paper is to investigate the major factors that impact the level of tax ethics and tax compliance in Jordan. Furthermore, the paper addresses under which circumstances tax evasion could be accepted in order to highlight the differences between the tax ethics of Jordanian citizens and those of citizens of other countries. This research was conducted using a questionnaire survey, involving tax auditors, Jordanian Certified Public Accountants (JCPA holders), and financial managers of shareholding companies registered at Amman Stock Exchange (ASE). The paper reveals that Jordanian citizens do not evade taxes due to probable personal gains but rather because they believe that the state is incompetent in the appropriate allocation of public money and that the current political and tax system is ineffective or corrupt. Our results show that tax ethics is affected by determinants under three stages in terms of their importance in shaping taxpayers’ choices. First, it is taxpayers’ perception of their governments’ credibility; since governmental corruption might justify tax non-compliance. By contrast, efficient governmental tax revenue expenditure avenues had a negative impact on tax non-compliance decisions. The second stage includes when the taxation system is perceived as unjust, when the tax rates are too high, and when the taxpayers are facing financial constraints, these circumstances were the central determinants of tax ethics and had a positive impact on tax non-compliance decisions. The third stage involves the surrounding referent groups since they have either a positive or negative effect on taxpayers’ decisions to evade tax, at least partly, in their communities or societies. In addition to the referent group, audit rates, and penalty rates are involved in the third stage. We argue that for tax evasion to be checked and for tax compliance to acquire normative ethical connotations, the state needs to stop fiddling with the tax system and try, instead, to create a high-trust culture. The key to this is for the state to establish its own credibility first.

An empirical investigation on investor psychological biases

The main aim of this paper is to investigate the impact of behavioral biases on the decisions of Jordanian investors. This empirical study investigated the impact of six behavioral finance biases and their impact on Jordanian investors’ financial decisions in the Amman Stock Exchange (ASE). Specifically, this paper empirically examines the impact of cognitive and emotional biases such as overconfidence, representation, availability, loss aversion, anchoring and regret aversion on investors’ financial decisions. Following Chaffai and Medhioub’s (2014) methodology, the paper applied the questionnaire-based approach and managed to collect 693 responses out of 2000 questionnaires (34.65 percent response rate) during the last five years. The main result achieved is that Jordanian investors take their decisions by falling for three main biases such as overconfidence, loss aversion, and anchoring. Jordanian investors believe that their decisions will lead to positive gains even if they are not based on highly developed models that can be used to direct investment strategies.

IMPACT OF LEVERAGE, LIQUIDITY, AND BANK SIZE ON THE FINANCIAL PERFORMANCE OF JORDANIAN COMMERCIAL BANKS IN 2012-2022

The banking sector plays a significant role in countries’ economies worldwide. It provides financial stability in the whole economy. It offers safe and secure financial services to help people. This study fills the gap in the literature related to the banking sector in Jordan. Leverage is the employ of borrowed money to magnify the outcomes of an investment. However, companies use leverage to increase the returns of investors' money, and investors can employ leverage to exploit various securities. The study aims to measure the impact of financial leverage, liquidity, and bank size on the financial performance of Jordanian commercial banks (return on equity) on 13 Jordanian commercial banks listed on the Amman Stock Exchange during the period from 2012 to 2022. The fixed-effects model was used to achieve the objectives of the study, and its results showed a statistically significant positive effect of financial leverage on the financial performance of banks, while it showed a statistically significant negative effect of volume on financial performance, and the conclusion is that there is no effect of liquidity on financial performance. The study recommends working on increasing the indicator of the size of Jordanian commercial banks, which is represented in total assets because of its role in increasing the financial performance of Jordanian commercial banks. Keywords: Financial Leverage, Liquidity, Volume, Financial Performance, Commercial Banks, Jordan DOI： https://doi.org/10.35741/issn.0258-2724.58.3.44

Reassessing the Long-Run Abnormal Performance of Jordanian IPOs: An Event Study Approach

Abstract This paper examines and reviews the fundamental challenges that academicians face when using the event study methodology to assess the long-term consequences of financial events on the economy and to describe market reactions. Numerous studies have demonstrated that businesses can experience abnormal returns from 1 to 5 years after major financial events. Also, this paper investigates the long-run price performance of initial public offerings (IPOs) in Amman Stock Exchange (ASE). The sample period expands from 2018 to 2022. Various findings are obtained by employing several analytical methods. First, long-run price performance of IPOs is negative, and a strong evidence shows that the long-run performance is sensitive to the benchmark employed. To assess the long-term performance of IPOs, I used both cumulative abnormal returns (CAR) and buy-and-hold abnormal returns (BHAR) as aggregated models. I explained the methodology which is adopted in this study in detail for the event–time approach. However, I used the crucial values for the skewness-adjusted t-statistic to infer statistical tests. Even though BHAR provided weaker results, all methods indicated negative long-run abnormal returns for IPOs. Yet this performance varied when comparing the performance utilizing ASEI, Fama–French three-factor (FF3F), and matching firm (MF) as benchmarks.

Corporate governance systems and financial risks: A developing country evidence

Banks are one of the essential pillars of the financial sector (Alzuod & Alqhaiwi, 2022), however, banking is a high-risk industry (de Andres & Vallelado, 2008). The aim of this paper is to investigate the impact of the board’s structure and ownership structure on the financial risks of Jordanian commercial banks. Data was gathered manually from the financial reports. Notably, the study addressed two types of financial risks: liquidity risk and credit risk. The study sample included commercial banks listed on the Amman Stock Exchange (ASE) to cover the period 2014–2019. To achieve the study’s objectives, multiple regression analysis was run to test the hypotheses. The results reveal a negative, statistically significant impact of the board size, institutional ownership, and bank size on liquidity risk. The results also demonstrated a negative effect of board independence, ownership concentration, bank size, and CEO duality on credit risk. In sum, the results support previous studies that found a statistically significant role of corporate governance mechanisms in reducing financial risks. The study recommended the need to enhance foreign investment and institutional ownership.

The impact of intellectual capital on financial performance of commercial banks: the mediating role of competitive advantage

The purpose of this study is to investigate the impact of intellectual capital on the financial performance of Jordanian commercial banks and the mediating role of competitive advantage. The value-added intellectual coefficient (VAICTM) model was used to measure intellectual capital; asset utilisation ratio to measure competitive advantage; and return on assets to measure commercial banks' performance. This empirical research was conducted using panel data from the financial reports of 13 Jordanian commercial banks listed on the Amman Stock Exchange for the period 2009-2018. Data analysis was achieved using STATA 15. The findings indicate that intellectual capital and competitive advantage positively impact the financial performance of commercial banks. Also, competitive advantage mediates the relationship between intellectual capital and financial performance. In this context, intellectual capital plays a significant role in creating value for a firm's stakeholders and developing a competitive advantage that enables the firm to face the increasing competition, especially in the banking sector.

The effect of financial leverage on company’s capital structure: Evidence from developing market

This research paper aims to investigate the impact of financial leverage on a company’s capital structure. The study focuses on 54 Jordanian industrial companies listed on the Amman Stock Exchange market for the year 2021. The primary objective of the research is to determine whether financial leverage has a significant effect on a company’s capital structure, debt, and equity. The study utilizes a purposive sampling technique, and the data is collected from the annual reports of the selected companies. The social statistical tool SPSS is used to analyze the data and test the hypotheses. The study’s findings indicate that financial leverage has a considerable impact on the capital structure of the organization. The results suggest that the higher the financial leverage, the higher the proportion of debt in the capital structure. Furthermore, the study also discovered that financial leverage has a large impact on a company’s debt and equity, which suggests that financial leverage plays a significant role in determining a company’s financing decisions. The study’s relevance lies in its contribution to the existing literature on corporate finance, particularly in the context of Jordanian industrial companies.

The effect of financial technology on Islamic banks performance in Jordan: Panel data analysis

Thanks to technological advancements in finance, Islamic banking might surely spread throughout developing nations and become more viable in the financial industry. The present investigation aims to thoroughly explore the impact of fintech upon Islamic banks and also investigate how fintech facilities affect Islamic banks performance within Jordan. A strategy known as a quantitative-descriptive inquiry was used in the inquiry. This study made use of yearly data (a panel data) that was collected from banking organizations using statistics based on yearly reports provided by Jordan Islamic bank, Safwa Islamic Bank and International Arab Islamic Bank listed alongside the Amman Stock Exchange between 2017 and 2021. The study discovered that financial performance of Islamic Banks was significantly impacted by Fintech services including online banking along with mobile banking. The increased beta value predicts that between 2017 to 2021, the financial prosperity of Arab Islamic International Bank, Jordan Islamic Bank, and Safwa Islamic Bank would be positively correlated with Fintech services. Additionally, it was discovered that SMS Financing and crowdsourcing had a detrimental impact on Islamic Banks financial performance. The investigation concludes by recommending that Islamic banking included in the study step up their attempts to educate the public about Islamic banking facilities.

The Effects of Sovereign Rating and Corporate Governance on The Capital Structure of Latin American Companies

This study analyzed the effects of sovereign rating and corporate governance (CG) on the capital structure of Latin American companies. A multilevel regression model was used for 823 companies listed on major Latin American stock exchanges over the period 2004-2018. The results showed that firm level is the most responsible factor for the variation in companies’ capital structure, while country level had the greatest influence on the variation in long-term debt. In the absence of CG mechanisms, sovereign rating is one of the factors not controlled by managers that can explain the capital structure of Latin American companies, which reduce their debt levels to protect themselves in the face of their countries’ sovereign rating variations. The results indicated that, despite having an audit committee and keeping independent members on the committee, firms choose to reduce their debt levels to protect themselves against the constant variations of their countries’ sovereign rating. The results also showed that CG mechanisms do not act in isolation when it comes to reducing agency problems. This research is one of the first studies to provide evidence on the implications of sovereign ratings and CG on the capital structure of firms in Latin America.

The Impact of Integrated Business Report on Going Concern Considering COVID-19 Pandemic

This study aimed to understand the impact of integrated business reports on the continuity of companies considering the Corona pandemic. To achieve the goal of this study, we got the industrial companies listed on the Amman Stock Exchange as a community and a sample of them. We got the data from the financial statements of the 33 companies published on the stock exchange website quarterly for the period (from 2018 to 2020): which covers two periods: the first before the COVID-19 pandemic and the second during the COVID-19 pandemic. We used the macro process analysis to analyze data, evaluated the integrated business report (independent variable) by giving to the disclosed item (1) and the undisclosed item (0): and the going concern (dependent variable) by Altman equation, finally COVID-19 pandemic (modified variable) by Dummy variable. The positive impact of integrated business reports is an ongoing concern, and the negative impact of the Corona pandemic ongoing concern, and when the Corona pandemic serves as a modifier on the relationship between integrated business reports and going concern, the impact of integrated business reports ongoing concern has become negative considering the Corona pandemic. Companies enhance their integrated reports on the risks they may face and develop strategic plans for crisis management at all levels (short-term, mid-term, and long-term) in the future.

THE IMPACT OF OWNERSHIP STRUCTURE AND DEBT ON AUDIT QUALITY IN NON-FINANCIAL COMPANIES LISTED ON ASE

Financial information issued by companies is vital to investors and capital providers for their investment decisions, while factors that impact audit quality should be ascertained. In Jordan, the effect of ownership structure and debt on audit quality has not been adequately studied. The current study purposes to examine the effect of ownership structure and debt on audit quality for non-financial companies listed on the Amman Stock Exchange. The ownership structure and debt represent the independent variables in this study, while audit quality is the dependent variable. Managerial ownership (MANOW), family ownership (FAMOW) and foreign ownership (FOROW) were used as proxies for the ownership structure, debt (DEBT) was represented by debt to equity, while audit quality (AQ) was represented by a log audit fee. Panel data approach with annual reports of 88 ASE listed industrial and services companies were employed, covering the 2009-2019 period. fixed effect and 2SLS methods were employed to examine the study hypotheses. The results of the study indicate the importance of the study variables in influencing the audit quality, ownership structure (MANOW, FAMOW, FOROW) positively affects the audit quality, and increased debt positively affects the audit quality.

BANKS’ PERFORMANCE AND THE CONTRADICTING ROLE OF SYSTEMATIC RISK DRIVERS - ASSESSMENT ACROSS COMMERCIAL BANKS

The Jordanian banking sector is vulnerable to many macrofactors that impact its performance, and due to the prominence importance of preserving the banking sector sustainable financial health, this study came to investigate the impact of macroeconomic risk factors represented in inflation rate, gross domestic product, and interest rate on ROA and ROE as a proxy of the financial performance of Jordanian commercial banks listed at Amman Stock Exchange for the period (2006–2020). The study employed a mean, standard deviation, and multiple regression analysis model. The results indicated a positive relationship between GDP and banks’ performance (ROA and ROE). But inflation rate and interest rate demonstrated an insignificant impact on ROA and ROE. Additionally, the results also indicted that there is a large fluctuation of inflation rate during the study period and this will lead to reluctance in investing in Jordan. Based on that, the study recommends that real measures be taken by the government to curb the inflation rate. Also, banks’ management should employ sophisticated techniques in stabilizing the lending interest rate and search for other investment opportunities to enhance their financial performance. The microeconomic risks such as liquidity risk positively affect banks’ performance, while the credit risk and operational risk negatively affect the bank’s performance.

Accounting Information Quality, Tax Avoidance and Companies' Performance: the Moderate Role of Political Connection

Purpose: This study examines the relationship between the accounting information quality, tax avoidance, and political connection in all Jordanian companies listed on Amman Stock Exchange. The current study also investigates the moderating effect of political connections on accounting information quality and company performance relationships. Further, the study examines the moderating effect of political connection on tax avoidance and company performance relationship. Theoretical framework: Political connections, tax avoidance, and the quality of accounting information affect a company's performance. According to the agency theory, reliable accounting information improves business performance and resources’ allocation efficiency by reducing information asymmetry. Additionally, the adverse effects of politics on companies are mitigated by accounting information quality. As a result, the cash flow is allocated effectively, improving the business's overall performance. Design/methodology/approach: The study uses the ordinary least squares (OLS) and applied moderated multiple regression (MMR). The sample data of this study includes 2266 company-years observations over the period 2008-2018 for all Jordanian companies listed on Amman Stock Exchange. The study compares accounting and market-based measurements of companies' performance (ROE, Tobin's Q). Findings: The study reveals consistent results among the measure. The results support the agency theory and found that accounting information quality reduces information asymmetry and positively affects companies' performance. Also, tax avoidance helps the companies to have more cash, and the results indicate a significant positive effect on companies' performance. In addition, the results support the agency theory argument and found that politics increase agency costs and negatively affect companies' performance. However, further analysis found that political connections sustain the positive effect of accounting information quality, which is a robust governance mechanism in Jordanian listed companies. Finally, the results found that tax avoidance with more political connections harms companies' performance. Research, Practical & Social implications: This study helps policymakers increase the governance mechanisms function in Jordanian listed companies. Also, the higher political relationship with the companies could be affected negatively on the Jordanian companies' achievement. Originality/value: The findings suggest several consequences for the fields of accounting and corporate governance. Additionally, the Middle East nations, including the Jordanian market, have had numerous economic difficulties that this study aids in resolving. For example, antagonistic political ties, information asymmetry, and insufficient allocation of financial resources.

The Relationship between Corporate Governance Mechanisms and Firm Performance: Evidence from Jordanian’s Listed Firms

The purpose of this study is to examine the relationship between corporate governance mechanisms and firm performance (measured in the form of return on assets (ROA), and return on equity (ROE) in the Jordanian context. Research is quantitative in nature, based on panel data of 58 firms listed in Amman Stock Exchange (ASE) for 8 years from 2012 to 2019, with 464 observations, and the panel corrected standard error (PCSE) regression has been used to assess the relationship among variables. The study found that board size, board independence and presence of female in board had no effect of firm performance whether ROA and ROE. Likewise, the study found no relationship between foreign ownership and ROE. In contrary, CEO duality, concentration ownership, foreign ownership had a positive effect on ROA. As well as, CEO duality and concentration ownership had a positive effect on ROE. However, the current study found that institutional ownership had a negative effect on firm performance whether ROA and ROE. The finding adds to the body of knowledge by demonstrating new and original evidence that some current corporate governance mechanisms are ineffective in reducing the agency problem in a developing country.

Holiday effect di Bursa Efek Indonesia, di Bursa Efek Amerika dan di Bursa Efek Jepang sebelum, sesaat dan sesudah pandemi covid-19

The phenomenon of traders entering the capital market is one of the causes of the stock market becoming unstable and experiencing market inefficiencies, which are often known as "market anomalies." The holiday effect is a market anomaly phenomenon that shows a tendency for the rate of return on a day before a holiday, but it can also be higher than the rate of return on other ordinary days. This study aims to find out how the holiday effect phenomenon is affecting the Indonesian, American, and Japanese stock exchanges during the 2019–2021 period. In addition to knowing whether there is a difference in stock returns between the day before the holiday and other days, you also need to know whether there is a difference in stock returns between the day before the holiday on the Indonesian, American, and Japanese stock exchanges during the study period. The data used is daily index data for the period January 2019 to December 2021 for each country. The research methods used are comparative methods and event studies. While the normality test, homogeneity test, ANOVA test, post hoc test, and independent sample t-test are used for technical analysis. The results showed that there was no holiday effect on the Indonesian, American, and Japanese stock exchanges because there was no significant difference in the average stock return between the day before the holiday and other days.

Political connection, ownership concentration, and corporate social responsibility disclosure quality (CSRD): empirical evidence from Jordan

One of the main goals of this study is to investigate whether politically connected firms have a different tendency toward disclosing CSR information compared to those without political connections. Another purpose of this research is to add to the existing literature by looking into the impact of political connections in moderating the relationship between ownership concentration and CSRD. We collect data on CSR activities undertaken by a group of 94 non-financial Jordanian companies listed on the Amman Stock Exchange using the content analysis approach. From 2010 to 2019, 940 yearly reports were evaluated for this study. Also, the study hypotheses are tested using Ordinary Least Squares regression (OLS). In Jordan, politically connected companies are more likely to disclose high-quality CSRD than unconnected companies. Furthermore, the findings revealed that CSRD is likely to be negatively impacted by ownership concentration. However, political ties can moderate the relationship between ownership concentration and the disclosure practice of companies included in our sample. The regression analysis results show that closely held businesses with political ties are more likely to reveal high-quality CSRD than businesses without political ties. The study adds to the debate over CSRD by shedding light on the role of political ties and ownership structure (particularly ownership concentration) in influencing CSRD by businesses. The findings of the study can help managers of Jordanian companies listed on the stock exchange make better decisions about their CSRD and other related disclosure, such as environmental disclosure. This is the first study to look at how political nexuses can moderate the relationship between firm CSRD and political connections in Jordan. As a result, it significantly adds to previous research.

The impact of the corona epidemic on working capital management for jordanian companies listed on the amman stock exchange

The impact of the corona epidemic on working capital management for jordanian companies listed on the amman stock exchange

The Role of Intellectual Capital in Firms’ Performance and Market Value: Evidence from Jordan

The purpose of this study is to examine the association between intellectual capital efficiency and firms’ financial performance and market value. The study employs the value-added intellectual coefficient (VAIC) model to measure intellectual capital efficiency. This model consists of three elements: human capital efficiency, structural capital efficiency, and capital employed efficiency. The study uses the return on assets (ROA) ratio to measure firms' financial performance and the market-to-book value (MBV) ratio as a measure of market value. Data for a sample of 113 manufacturing and service companies listed on the Amman Stock Exchange for 2014 to 2018 were analyzed using multiple regression analysis. The results indicate that VAIC has a significant positive relationship with a firm’s financial performance, while it is unrelated to a firm’s market value. Human and structural capital also have a positive influence on financial performance, but they have no relationship with market valuation. Capital employed is positively related to both financial performance and market value. The findings of this study would enable companies to better understand the role of intellectual capital in adding value for all stakeholders of the company. They may also bring standard setters’ attention to the need for recognizing or disclosing intellectual capital either quantitatively or qualitatively within the accounting financial reports, which may have the potential to increase the credibility of financial reporting.