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SCOPUS 학술저널

Dynamic Elasticities Between Financial Performance and Determinants of Mining and Extractive Companies in Jordan

This study aims to identify the elasticities and casualties of financial performance and determinants of the mining and extractive companies listed in Jordan’s stock market over the 2005–2018 period. The conceptual framework is based on the Resource-Based View theory and Arbitrage Pricing theory is used to describe the relationship between the external environment and the financial performance of the companies. Profitability ratio (return on assets) is utilized as a proxy of financial performance measurement. Meantime, the company’s characteristics, macroeconomic variables, and non-economic factors are utilized as independent factors. Data sources are panel data set for mining and extractive companies over the above period. Fully Modified Ordinary Least Square (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Pooled Mean Group (PMG) methods are applied. The empirical findings indicated that company size, sales growth, financial leverage, liquidity, and GDP growth were the critical determinants of mining and extractive companies’ financial performance in the Amman Stock Exchange. Thus, the findings conclude that company characteristics and GDP growth mainly drive financial performance. Moreover, the findings reveal that a bidirectional causal elasticity exists between GDP and financial leverage and return on assets (ROA). Sound financial performance can be obtained by paying more attention to GDP growth and firms’ characteristics.

1. Introduction

2. Theoretical Framework and Past Studies

3. Data, Variables, and Methodology

4. Empirical Results

5. Conclusion and Recommendations

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