Amman Stock Market Research Articles

Empirical analysis of government interventions on Jordan's stock market during the COVID-19 pandemic: An ARDL approach

The objective of this study was to examine the impact of government actions on the Amman Stock Market's performance over the period from March 1, 2020, to June 30, 2021. The research uses the ARDL technique to examine the immediate and long-term connections between the variables. The findings indicate that government actions have an impact on the Amman stock market. From a larger standpoint, the research found that government actions and the stringency index had a detrimental impact on the Amman stock market in the long term. In contrast, the Containment Health Index had a favourable impact on the Amman Stock Market. Our analysis found a negative correlation between the number of new COVID-19 cases and the performance of the Amman Stock Market. These results highlight the complex relationship between government activities, market strictness, and public health initiatives in influencing the behaviour of financial markets. This finding is consistent with and strengthens the outcomes of prior research, enhancing our comprehension of how pandemic-related variables impact the performance of the stock market. The study's results are very relevant for politicians, decision-makers, and investors, offering crucial insights to inform their decision-making processes in times of future crises and uncertainty.

The Role of Internal Control Systems in Ensuring Financial Performance Sustainability

This study investigates the influence of internal control systems (ICS) compliance on banks’ financial performance sustainability (FPS) in the Amman Stock Market. Using a questionnaire survey of sixteen listed banks, the extent of ICS compliance and its impact on various indicators of financial performance is examined, such as profitability, earnings, and returns on sustainability initiatives. It is found that the banks comply with ICS requirements and that ICS compliance positively and significantly affects their financial sustainability. In particular, this study shows that the control activities, information and communication, and monitoring components of ICSs are key drivers of bank performance. These findings have important implications for policymakers and regulators who aim to enhance the effectiveness of ICSs in banks and foster economic growth in the region. As sustainability becomes a vital issue in the banking sector, understanding how ICS compliance relates to financial sustainability is essential for ensuring long-term viability.

The reality of social responsibility accounting in commercial banks listed on the Amman Stock Exchange

The modern concept of social responsibility states that in the due course of business, enterprises should pay due attention to social interests of stakeholders as a whole as most of the decisions taken by a company affect all the stakeholders. Through these means, companies are now focusing on informing their stakeholders about their contribution to social responsibility through disclosures made in annual reports. In this direction, this study is being conducted with the aim of examining the social responsibility accounting disclosures (SRA) of the banks listed on the Amman stock market. The study analyzed data from 14 Amman Stock Exchange banks for ten years from 2012 to 2021. Data for the study were gathered from Amman Stock’s official website. The results of the study confirm that the extent of disclosures on SRA has been decreasing over the study period, and such a trend has been seen in all the four sub-dimensions (community, environment, employees, and stakeholders) of SRA. The results of the study confirm that social responsibility accounting disclosures differ significantly across the set of business characteristics like firm size, firm age, and equity ratio. The results also confirm a significant negative relationship between bank size and equity ratio with SRA and a significant positive relationship between age and profitability with SRA. The study results suggest that SRA disclosures should be increased both in terms of volume and pattern.

The Impact of Adopting the Joint External Audit Approach on the Auditor's Opinion and its Reflection on Information Asymmetry: An Applied Study at Firms Registered on Amman Stock Market Exchange

The study aims to form a new model to examine the indirect effect of adopting the joint external approach on the auditor's opinion and its reflection on information asymmetry: an applied study on firm registered on Amman Stock Market Exchange (ASME) by considering auditor's opinion as mediator variable. The population sample used in the current study consists of 46 joint-stock companies from (ASME). data collection was conducted using the annual financial reports of the period (2015-2019), both descriptive and analytical tools are used, the SPSS and AMOS software program was used to test for the hypotheses. The study concludes that the new model is useful in explaining the indirect effect of joint auditing on information asymmetry. It finds that joint audits have a significant positive effect on the qualified auditor’s opinion. Joint audit has a significant negative effect on information asymmetry. Qualified auditor’s opinion has a significant negative effect on information asymmetry. Joint audit has a significant positive effect on the qualified auditor’s opinion and this effect leads to decreased information asymmetry. Consequently, this paper contributes to the limited literature by suggesting a new model for the effect of joint audit on auditor’s opinions and its impact on information asymmetry. Significant recommendations urged conducting more research and studies related to adopting the external joint auditing method on the auditor's opinion and its reflection on the inconsistency of information, which enhances interest in this subject.

The Effect of Firm Life Cycle on the Relationship between Market Stock Return and Accounting Earnings, Losses and Book Value per Share: Evidence from Jordan

This study aims at examining whether the relationship between market stock return and earnings (losses) per share and book value per share varies according to each and both of the sign of net income and the stage the firm is going through within its life cycle. The study used a sample of 33 industrial public shareholding companies listed in Amman Stock Market (164 observations) during the period 2011-2019.
 To achieve the objectives of the study, the researchers executed a number of simple -and multiple- regression models of the returns-earnings (losses) and book value to examine the relationship from various dimensions: (1) the explanatory power of earnings (losses) per share, (2) the explanatory power of book value per share, (3) the incremental explanatory power of book value per share over that of earnings (losses) per share. The models were executed for various sub-samples constructed according to the sign of net income and the stage in which the company is going through within its life cycle, separately and combined.
 The results of the sub-samples which were constructed based on both the sing of net income and the stage which the company is going through revealed the following: (1) earnings per share and book value per share have no information content for profitable companies in the introduction and growth stages, (2) the main explanatory variable for market stock return for profitable companies in the maturity stage is earnings per share, (3) the only explanatory variable for market stock return for profitable companies in the shake-out and decline stages is earnings per share, (4) losses per share and book value per share separately have no information content for losing companies in the introduction and growth stages, (5) losses per share and book value per share have information content when both are entered together in the model, (6) only book value per share has information content for losing companies in the maturity stage, (7) loss per share and book value per share separately and together have no information content for losing companies in the shake-out and decline stages.
 The results suggest that the reasons behind the low explanatory power of the relationship between market stock return and earnings per share are the presence of losses, the failure to take into account the stage in which the company is going through in its life cycle and the failure to consider the book value per share in the model of the relationship, which leads to an error in the specification of the relationship, especially if the result of operations is a loss. These results are expected to assist stakeholders in making rational decisions and recommendations.

The Impact of Amman Stock Exchange Simulation Room on the Level of the Business College Students at Al-Zaytoonah University of Jordan (Predictive Approach)

Since the mid-sixties of the twentieth century, interest in simulation has increased as an appropriate and effective method in the education process, especially after the advent of computers; The simulation process of concepts, activities and experiments is done through the computer, and it has an important and prominent role in the educational process. In the past, the theoretical aspects of education were the core of the education process for students, and this is certainly not enough to raise the level of students. Furthermore, understanding the handling and investing of securities is a challenging subject that requires students to understand and apply financial theories and models. Hence, this study pursued the influence of the Amman Stock Exchange simulation room on the student level of the College of Business at the Al-Zaytoonah University of Jordan through the predictive approach. The results show that the simulation education system may encourage students and increase their intellectual abilities, attracts the attention of the students as well as gives a great opportunity for students to acquire the skills of dealing with the financial market in a practical and applied manner by using a real trading system based on high technology performance which performed by Amman Stock Market.

EFFECT OF FINANCIAL LEVERAGE ON THE FINANCIAL PERFORMANCE OF JORDANIAN PUBLIC SHAREHOLDING COMPANIES: APPLIED STUDY ON THE FINANCIAL SECTOR OF JORDAN FOR THE PERIOD OF 2015-2019

This paper aimed to demonstrate the effect of financial leverage measured through the liability-to-equity ratio on financial performance measured by the return on equity and the return on assets (ROA) in Jordanian public shareholding financial companies listed on the Amman stock Market. To achieve the objectives of the study, the descriptive analytical approach and simple regression analysis were used. The study population was represented by public shareholding companies listed on the Amman Financial Market during the period of 2015–2019. A total of 25 companies were selected as for the study sample. The study concluded that financial leverage affects the financial performance measured through the return on property rights in Jordanian public shareholding companies(ROE) and financial leverage does not affect financial performance measured through ROA. The study recommended that financial departments in financial institutions should identify factors that influence ROA that serve the company and work to achieve the optimal exploitation. For assets that generate additional profits to maximise the wealth of owners.

UNDERSTATING THE IMPACT OF ECONOMIC FACTORS ON STOCK YIELD: JORDANIAN STOCK MARKET CASE

The study aimed to identify the most salient and critical factors influencing the Stock yield and causing this sharp fluctuation, and clarifying which factors are more influential than others on the Stock yield in the Amman Stock Market – Jordan. The study population consisted of all listed companies in the Amman Stock Market. The sample of the study is random stratified and includes 30% of the original population. The study sample numbered 60 companies of the companies listed on the Amman Stock Market. The main findings are the positive relationship between inflation rates, interest rate, number of employees and capital shares with income shares. The results also showed no relationship between the deficit and surplus of balance of payments and stock yield, as well as no relationship between the level of gross domestic product (GDP) and the stock yield in Amman Stock Market in Jordan.

The Relation between the Financial Market Development and Economic Growth in Jordan

The purpose of this study is to examine the relationship between economic growth and financial market development in Jordan through the co-integration and error correction model between during the period 2000-2018. The study employs the error correction model to determine the short-run dynamics of the system and the cointegration test to examine the long-term relationship . The study is limited to a few variables, changes in real Gross domestic product GDP and the IMF indicator for financial market development . The results show that in the long-term there is a significant relationship between economic growth and financial market development for Jordan data., while in the short-term there is no statistically significant relationship between the stock market development and economic growth. Furthermore, causality is going from economic growth to financial market development, not vice versa. Keywords : Economic Growth, financial market development, Amman stock market, IMF indicator. DOI: 10.7176/JESD/10-14-12 Publication date: July 31 st 2020

Impact of macroeconomic factors and political events on the market index returns at Palestine and Amman Stock Markets (2011–2017)

This study aims to investigate the effect of macroeconomic factors on Palestine and Amman Stock Exchange returns. Also, the study handles the political events in the area and their impact on Palestine and Amman stock markets returns. This study applied the macro-econometric model based on Arbitrage Pricing Theory. In addition, the most important political events are selected, and their effect was tested using the event study methodology. The results show that the consumer price index, gross domestic product, and exchange rate have a significant impact on stock index returns, but industrial production index and balance of trade have no significant effect. In addition, the results reveal that the political events have a significant effect on Palestine and Amman stock markets returns. For instance, at Palestine Stock Exchange, seven out of eleven events had a significant impact on the Palestinian general index returns. Regarding the Amman Stock Exchange, there were nine out of eleven events, which had a significant impact on the Jordanian general index returns. The main results show that the macroeconomic factors and political events have a significant impact on the Palestine and Amman stock market returns. Both Palestine and Amman Stock Markets are inefficient and the markets do not absorb uncertain information and noisy events.

ARIMA Model in Predicting Banking Stock Market Data

Banking time series forecasting gains a main rule in finance and economics which has encouraged the researchers to introduce a fit models in forecasting accuracy. In this paper, the researchers present the advantages of the autoregressive integrated moving average (ARIMA) model forecasting accuracy. Banking data from Amman stock market (ASE) in Jordan was selected as a tool to show the ability of ARIMA in forecasting banking data. Therefore, Daily data from 1993 until 2017 is used for this study. As a result this article shows that the ARIMA model has significant results for short-term prediction. Therefore, these results will be helpful for the investments.

THE IMPACT OF THE RELIABILITY OF THE ACCOUNTING INFORMATION SYSTEM UPON THE BUSINESS PERFORMANCE VIA THE MEDIATING ROLE OF THE QUALITY OF FINANCIAL REPORTING

This study aims to examine the relationships of the reliability of the Accounting Information System (AIS) based on the implementation of SysTrust's framework (principles and criteria) as an internal control method to the business performance and the mediating role of the quality of financial reporting in this relationship among Jordanian public listed companies. – Based on the literature review and contingency theory; an integrated conceptual framework was developed to guide this study. The study's conceptual framework consists of three major constructs: the reliability of AIS was conceptualized and measured by the SysTrust's framework (principles and criteria) the business performance was measured by the financial and non-financial indicators and the quality of financial reporting was conceptualized and measured by the IASB's framework fundamental qualitative characteristics. A total of 239 responses were obtained through a self-administered questionnaire from PLCs in the Amman stock market. The empirical findings of the study suggest that the reliability of the AIS is based on the implementation of SysTrust’s framework has a significant and positive relation to business performance and the quality of financial reporting significantly mediate the relationship.

Effect of Liberalization of Amman Stock Market on the Prices Fluctuation for the Period (1994-2015)

This study aimed to identify the relationship between the information and fluctuations in stocks return following the liberalization process of financial market, and illustrate the effect of liberalization of Amman Stock Exchange on price fluctuations, and the trend of this influence. To achieve this goal the researcher depended on the data of the daily stocks returns for Amman stock market for the period (1994-2015).The study was based on the analytical descriptive method. The period from which the financial data were taken was divided into two periods: first, the pre-liberalization of the financial market (1994-2000), and the second period, the post-liberalization which extended from 2001 to 2015, the appropriate statistical analysis was conducted through (e-views) program, and using the (GARCH) model.The results showed that there is an effect of the stock market liberalization on the fluctuations pattern in the Jordanian Stock Exchange, the speed and accuracy of information flow to the market has increased after stock market liberalization, it also appeared that there are some events and factors such as wars and catastrophes which lead to strong and illogical fluctuations in the stock market, and that the variation in price changes before the liberalization period was integrated variation which indicates that news have perpetual influences on price changes.

The Impact of the Use of Accounting Information Systems on the Quality of Financial Data

This study aimed at identifying the effect of the use of accounting information systems on the quality of financial data, applied over service companies of Amman Stock Market. The study sample consisted of (70) individuals who work in different service sectors, where a questionnaire was designed and distributed. (56)Valid questionnaires were retrieved for statistical analysis purposes (80%).The study results indicated that there is a statistically significant positive effect of the nature and security of accounting information systems on the quality of financial data. However, the inputs of the accounting information systems did not affect the quality of the financial data. The level of quality of the financial data that the Jordanian service companies depend on has been found to be high.The results of this study showed significant differences at (α ≤ 0.05) among the Jordanian service companies in terms of the nature, inputs and security of accounting information systems and the quality of financial data attributed to the sector to which the company belongs.Based on these results, the study came out with several recommendations, the most important of which is that Jordanian service companies should be keen to update the accounting information systems used in accordance with the technological developments, and the necessity of Jordanian service companies to continue to pay attention to the quality of financial data provided to their beneficiaries, which are used to evaluate the company’s performance.

The SysTrust's framework implementation as an internal control for assuring reliability of AIS and business performance: an integrated approach

This study aims to examine and validate the impact of the implementation of SysTrust's framework (principles and criteria) as an internal control method for assuring reliability of accounting information system on the business performance via the mediating role of the quality of financial reporting among Jordanian public listed companies based on the literature review and contingency theory; an integrated conceptual framework was developed to guide this study. The study's framework consists of three constructs: the SysTrust's service framework, the business performance and the quality of financial reporting. Data were collected on these main constructs and related influential constructs from 239 accounting and auditing directors in Amman Stock Market. Structural equation modelling was used to test the relationships simultaneously and to understand the predictive behaviour of the various attributes. Results revealed a strong relationship between the SysTrust's framework which has direct effect on business performance and the quality of financial reporting.

The Impact of Strategic Management Accounting Techniques in Taking Investment Decisions in the Jordanian Industrial Companies

This research aimed to identify the impact of strategic management accounting techniques in taking investment decisions in the Jordanian industrial companies. The population of the study included all the Jordanian industrial companies while the sample consisted of (93) respondents from the investors and financial mediators in Amman stock market. The research revealed the presence of an effect of the strategic management accounting techniques with its variables (target costing, balanced scorecard, just in time production system) in taking investment decisions in the Jordanian industrial companies. In the light of the results, the researcher presented a number of recommendations, most prominently: using the strategic management accounting techniques by the Jordanian industrial companies and caring for its different fields to be able to interact and respond to the environmental, social and economic variables.

The Impact of Ownership Structure on the Insurance Companies Applicability of Corporate Governance Instructions

The study aimed at recognizing the concepts and principles of corporate governance, identifying the commitment level of the Jordanian insurance companies to apply the corporate governance instructions issued by the insurance commission and specifying the role of different types of owners in actuating the corporate governance regulations and elevating their quality.        The study was conducted on a sample of 15 insurance companies enlisted in Amman Stock market during the period from 2011 to 2014; and in order to measure the ownership structure's variables, the insurance companies financial reports published on Amman Stock market site were utilized, their contents were checked and the companies ownership structure types were identified through the centralization of company shares ownership at a specific entity whereby the ownership structure was divided into five types namely family ownership, institutional ownership, individual ownership, government ownership and foreign ownership. The corporate governance instructions to insurance companies were adopted to design a questionnaire which incorporates five divisions connected to each of the board of directors, the executive management, the audit committee, the risk management and the internal control system and the internal auditing. The questionnaire was distributed on the insurance companies employees who occupied different administrative positions. To realize the objectives of the study, a number of statistical methods that accommodate with the nature of the study were used like the simple regression and the multiple regression models to test the hypotheses of the study.                The results indicated that the Jordanian insurance companies manifest acceptable obligation to apply the corporate governance instructions, and revealed the presence of an effect of the ownership structure on the level of those instructions' application.   Based on those results, the study presented a cluster of recommendations from which are: specifying the controlling entities in charge of following up the actual implementation of the corporate governance instructions at insurance companies, reformulating said instructions in a way that guarantees the protection of the stakeholders' rights and clarifying the tasks and duties of the audit committee.

The Impact of Auditing on Stock Prices of Amman Stock Market’s Listed Companies

The purpose of current study is to explore the impact of auditing on stock prices of Amman stock market. Study is conducted based on primary data collected from finance managers of listed companies of Amman stock market, about audit and its impact of stock prices. Impact of audit is indicated in terms of audit quality and its effect on financial performance of firm because stock prices are an indicator of financial performance of firms. To find out the relationship among key variables of study, audit quality and stock prices, hypotheses are proposed as well as tested using SPSS and AMOS. Descriptive analysis, factor analysis and structural equation modeling is implemented to find out the results. It is found that audit has a direct impact on stock prices of firms in Amman stock market, while improved audit quality results in improved financial performance of the firm indicated in their stock prices.

Oil Price Fluctuations and Their Impact on Stock Market Returns in Jordan: Evidence from an Asymmetric Cointegration Analysis

This paper examines whether Amman stock market returns responds asymmetrically to oil price fluctuations for the quarterly period 2000-2015 by applying asymmetric cointegration. Using both TAR and MTAR specification of Enders and Siklos’s (2001) models, and based on the asymmetric ECM, the results provide evidence that stock returns react to oil price variations in an asymmetric manner. In particular, rising oil prices has a larger impact on stock returns; this implies that increases in oil prices have a significant effect on the behavior of stock market in Jordan. The significant relationship between oil prices and stock returns strengthen their predictability power, so that appropriate strategies may be built on the basis of expected increases or decreases in oil prices.

MARKET EFFICIENCY OF THE AMMAN STOCK MARKET: EVIDENCE FROM THE EXAMINATION OF TRADING RULES

This paper tests the validity of the weak-form of the Efficient Market Hypothesis for theAmman Stock Exchange (ASE) for a full sample and three sub-periods of that spanningperiod 2000-2012. The research uses statistical analyses and moving average rulesand offers further evidence of the inefficiency of the Amman stock market whenapplying trading rules. The empirical results indicate that moving average strategiesare successful in predicting the returns for the ASE Index and outperforming the naivebuy-and-hold strategy. However, the findings for the sub-periods suggest a certaindegree of improvement toward the efficiency achieved by the Amman stock market thathas occurred from recent developments such as the introduction of new regulationsand the development of market microstructures.