American Journal of Economics and Business Administration

The Financial Behavior of Jordanian Pharmaceutical Industry

Mamoun Yasien Shakatreh

DOI : 10.3844/ajebasp.2019.1.9

American Journal of Economics and Business Administration

Volume 11, 2019

Pages 1-9

Abstract

The study aims to analyze the financial behavior of the Jordanian pharmaceutical industry companies listed in Amman Stock Exchange (ASE) during the period 2005-2015. The study examines the relationship between funding sources and the Return on Equity (ROE) in order to reach conclusions and to make recommendations to enhance the performance of the Jordanian pharmaceutical industry companies. The Generalized Least Square (GLS) test and Hausman test are used to estimate the fixed effects and random effects model. The random effects model proved to be more suitable for testing the impact of the financial behavior on the profitability of the Jordanian pharmaceutical industry as measured by ROE. The study results showed that the financing through equity has a positive and significance effect on the ROE, which explains the fact that the Jordanian pharmaceutical companies mainly depend on equity financing by 67%. The study recommended that the Jordanian pharmaceutical companies should make an effort to finance its capital increase, assets increase and expansion by financing through equity sources.

Copyright

© 2019 Mamoun Yasien Shakatreh. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.