Research Article Open Access

The Financial Behavior of Jordanian Pharmaceutical Industry

Mamoun Yasien Shakatreh1
  • 1 Al-Balqa Applied University, Jordan

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.

American Journal of Economics and Business Administration
Volume 11 No. 1, 2019, 1-9

DOI: https://doi.org/10.3844/ajebasp.2019.1.9

Submitted On: 18 August 2018 Published On: 12 November 2018

How to Cite: Shakatreh, M. Y. (2019). The Financial Behavior of Jordanian Pharmaceutical Industry. American Journal of Economics and Business Administration, 11(1), 1-9. https://doi.org/10.3844/ajebasp.2019.1.9

  • 3,979 Views
  • 2,975 Downloads
  • 0 Citations

Download

Keywords

  • Behavioral Finance
  • Return on Equity
  • Pharmaceutical Industry
  • Jordan