Search

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.

This paper empirically investigated the impact of board diversity on the performance of 13 banks in Jordan during the period of 2005–2020. Panel data was collected from the Amman Stock Exchange (ASE) and the formal websites of the different banks. Fixed-effect and random-effect techniques have been applied to check the impact of board diversity on banks’ performance. The results found that the larger the size of the bank, the better their return since they hold more deposits, and this increase their investment opportunities. In addition, the larger the size of the board, the better the performance since more experienced directors would be included in the decision-making and higher added knowledge in the decision-making process. Including more board members should enrich the decision-making process with high experience and know-how characteristics. In addition, this paper confirmed that Jordanian banks should include more women in their boards since sharing their managerial skills and experience should enhance banks’ performance.

This paper empirically investigates the smoothness of dividends on non-financial companies in Jordan by applying the asymmetric partial adjustment model. In addition, this research investigated the data for 65 non-financial companies (37 industrial and 28 services) listed on the Amman Stock Exchange (ASE) covering the period 1997–2020. Fixed and random-effects techniques have been applied to check the smoothness of dividends. The results confirmed that the non-financial Jordanian companies smooth their dividends at a moderate rate, our results contradict the signaling theory; we find that large companies smooth their dividend faster than small ones. Furthermore, in line with the agency cost theory, low-leveraged firms smooth their dividends faster than high-leveraged firms. Also, our results confirmed that highly profitable companies smooth their dividend more and this comes in line with the signaling theory.

It has been a challenge to provide an explanation of the behavior of different investors in different markets. Behavioral finance tends to look at the psychological and emotional factors related to the stock market and may influence behavior of investor and the efficiency of the market. The aim of this study is to investigate the influence of psychological and emotional factors on the behavior of investors in the Dubai Financial Market. The importance of this empirical paper is developed through the essential step in investment management which is decision making. This study was conducted to provide an explanation of how factors related to behavioral finance may influence the Dubai Financial Market. The data for this study was collected through a questionnaire distributed to investors in the Dubai stock market and then were analyzed using the multiple correspondence analysis. This paper collected the response of 294 out of 500 questionnaires provided to Dubai investors. The results of the analysis showed that investors with a high level of education are associated with low levels of behavioral biases, and individuals who invest amounts up to 20,000 AED are subject to behavioral biases. Based on these results, it can be concluded that information in the market lead to market efficiency.

The primary aim of this paper is to measure competitiveness in the Jordanian banking sector. In addition, this paper examines the competitive dynamics in this sector. Based on panel data analysis and the time period 2000-2014, the estimation results indicate that Jordanian banks operate under monopolistic conditions and this has not changed during the period of the study. Naturally, the findings of this paper have a number of implications. This is based on the literature which argues that bank competition influences, for example, real economic growth, manufacturing productivity growth, and the lending channel of banks.

The relationship between dividend, retained earnings and stock returns is one of the debated topics addressed by the researchers; different theories used in order to examine empirically the relationship by using different models. This study collected the data of 85 companies (52 industrial and 33 services) for the period 2000-2014 and the results show that there is a significant relationship between dividend policy, retained earnings and share price taking into consideration that the size of the firm in Jordan affects the preference of investors significantly.

The primary goal of this interdisciplinary paper is to examine whether or not the adoption of depositor-focused marketing tool (Lottery prizes) pays in the Jordanian banking system. The fact that about half of the commercial banks offer lottery (cash) prizes to their customers (depositors), it would be interesting for academics in finance and marketing, bank managers, and bank shareholders, to examine the impact of this marketing policy on the performance of this sector in terms of return on assets and net interest margin. Based on a total of thirteen (13) Jordanian commercial banks and the time period 2002-2012, the results indicate that lottery prizes have a positive and significant impact on the accounting performance of banks. However, this positive impact comes at the expense of bank efficiency. In other words, it is concluded that the extra “cost” incurred by banks that offer cash prizes are “passed on” to their customers in the form of wider net interest margin.

The financial economics literature has given the capital structure choice of firms a lot of attention. Indeed, this literature includes not only econometric analysis of the determinants of capital structure, but also surveys of Chief Financial Officers on this financial decision. This paper reports the leverage ratios of listed Saudi and Palestinian non-financial firms and examines whether the differences in the determinants of their ratios are due to firms-specific factors, or country-specific difference. Based on a total of 55 listed Saudi firms and 18 listed Palestinian firms during the period 2006-2012, and using the Seemingly Unrelated Regression, and Panel data Analysis, the results indicate that factors like asset structure and firm profitability impact the capital structure of both sets of firms. However, the differences in their impact are due to country-specific and not firm-specific factors. This result is not really surprising given that both sets of firms operated under different political and economic circumstances.

The financial economics literature has given the capital structure choice of firms a lot of attention. Indeed, this literature includes not only econometric analysis of the determinants of capital structure, but also surveys of Chief Financial Officers on this financial decision. This paper reports the leverage ratios of listed Saudi and Palestinian non-financial firms and examines whether the differences in the determinants of their ratios are due to firms-specific factors, or country specific difference. Based on a total of 55 listed Saudi firms and 18 listed Palestinian firms during the period 2006-2012, and using the Seemingly Unrelated Regression, and Panel data Analysis, the results indicate that factors like asset structure and firm profitability impact the capital structure of both sets of firms. However, the differences in their impact are due to country-specific and not firm-specific factors. This result is not really surprising given that both sets of firms operated under different political and economic circumstances.

This paper measures the bid-ask spread for all listed Jordanian banks and examines its’ determinants. Based on a total of 15 banks and the time period 2012-2014, the results show that Jordanian banks’ stocks suffer from relatively high liquidity cost. This finding has a number of implications to the banks’ cost of capital, and the behavior of their stocks’ return. In addition, unless the management of the capital market takes the issue of stock liquidity more seriously, it is argued that such listed firms (banks) might choose to cross-list their stocks or leave the local market altogether and list their stocks abroad. As expected, the objective of such a move is to improve their stocks’ liquidity and hence, realize the envisaged benefits.

The different capital structure theories propose the possible asymmetric behavior of capital structure. Thus, this paper empirically investigates whether non-financial Jordanian firms follow symmetrical or asymmetrical adjustment model. Then, an interaction model with the size and profitability (firm characteristics) investigated the impact of low/high profit and small/large size on the adjustment of leverage towards the target leverage ratio. This paper covered the period of 14 years (2002-2015) for a total of 110 companies listed on Amman Stock Exchange (75 industrial and 35 services). Results indicate that although Jordanian firms seek a target leverage ratio, their adjustment towards that target is Asymmetrical and high profitable and large companies tend to adjust faster than low profitable and small size companies.

It is common knowledge that growing firms constantly look for new capital. This is why, going public is one way forward. Firms that seek stock exchange listing realize a number of advantages. An initial public offering (IPO) creates greater public awareness of the firm’s products and services. In addition, such firms can improve their debt to equity ratio and as a result, reduce their cost of capital. In view of the benefits of listing, this paper examines the capital structure of listed and non-listed Jordanian non-financial firms. Based on the time period 2008-2011, and a total of 62 listed and 30 non-listed firms, the results indicate that the leverage ratio of listed Jordanian firms is significantly lower than their listed counterparts. Also, it is interesting to note that while the extent of the impact (negative) of profitability on leverage is more apparent in the case of the non-listed firms. The asset structure of assets is a significant determining factor of leverage in the case of non-listed firms only.

The objective of this paper is to examine the issue of entrepreneurship in Jordan. Based on the survey of Jordanian adults (2006 individuals in total) which is carried out by the Global Entrepreneurship Monitor (GEM), it is reported that entrepreneurship in Jordan is lower than might be expected. In addition, while cultural attitudes are favorable, males are much more likely than females to become involved in entrepreneurial activity. Finally, the results indicate that while the density of entrepreneurship at the regional level reflects some significant differences, fear of failure is one of the most significant factors that impact entrepreneurial activity. Jordanian policy-makers should not assume that by promoting entrepreneurship per se, the national economy will achieve strong economic growth, and reduce unemployment levels. Such a well-intentioned policy might lead to nothing but disappointment at the macro level. Unless the quality (and quantity) of entrepreneurship improves, the likely impact of Jordanian entrepreneurship, especially female entrepreneurship, will remain centered around poverty reduction.