The effect of a firm’s internal factors on its profitability: Evidence from Jordan

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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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    • 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
    • Conceptualization
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Data curation
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Formal Analysis
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Funding acquisition
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Investigation
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Methodology
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Project administration
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Resources
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Software
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Supervision
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Writing – original draft
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Writing – review & editing
      Firas Dahmash, Wasfi Al Salamat, Walid M. Masadeh, Hashem Alshurafat
    • Visualization
      Firas Dahmash
    • Validation
      Firas Dahmash, Hashem Alshurafat