An Empirical Study of Firm Structure and Profitability Relationship: The Case of Jordan

Abstract

The present study examines the relationship of firm structure and profitability, taking into consideration major characteristics such as firm size, firm age, debt ratio and ownership structure of 48 Jordanian industrial companies for a period of one decade, that is from 1995 to 2004, listed in Amman Stock Exchange. Hypotheses are developed taking into account both previous research and the particular idiosyncrasies of the national context. The study employed two model specifications in order to test the hypotheses, using the profitability measurement of Rate of Return on Equity (ROE) and Rate of Return on Investment (ROI). The empirical findings suggest that firm structure emerges as an important factor affecting profitability. The results indicate that a weak relationship existed between some of the independent variable and profitability, except for debt ratio.

Citation

Mahmoud Abu‐Tapanjeh, A. (2006), "An Empirical Study of Firm Structure and Profitability Relationship: The Case of Jordan", Journal of Economic and Administrative Sciences, Vol. 22 No. 1, pp. 41-59. https://doi.org/10.1108/10264116200600003