Size Effect on Company Profitability: Evidence from Jordan

Abstract

This paper tested the size effectiveness on company profitability for the Jordanian context through applying two different models for a large sample of (1538) companies listed in Amman Security Exchange covering the period between 2005 and 2011. The results of the analysis indicated a highly significant value for the three main sectors of the sample. The highest significant value result was for the industrial sector companies, followed by the services sector companies, and lastly the financial sector companies. The results of the detailed industry analysis concerning the whole sub-sectors were similar with the highest values for the food and beverages companies, the commercial and educational services companies, and the insurance companies. The results indicated that the bank companies, the diversified financial companies, and the real estate companies have insignificant coefficient values for the total assets with company size. However, the bank companies only were insignificant for the total revenues coefficient of the company size. Finally, the results of the additional analysis of the top and bottom 30% indicated that the financial sub-sample were insignificant, and inconsistent with the results of the main financial sub-sample companies.