Size Effect on Company Profitability: Evidence from Jordan

Abstract

This paper tested the size effectiveness on company profitability for the Jordanian context through applying twodifferent models for a large sample of (1538) companies listed in Amman Security Exchange covering the periodbetween 2005 and 2011. The results of the analysis indicated a highly significant value for the three main sectorsof the sample. The highest significant value result was for the industrial sector companies, followed by theservices sector companies, and lastly the financial sector companies. The results of the detailed industry analysisconcerning the whole sub-sectors were similar with the highest values for the food and beverages companies, thecommercial and educational services companies, and the insurance companies. The results indicated that thebank companies, the diversified financial companies, and the real estate companies have insignificant coefficientvalues for the total assets with company size. However, the bank companies only were insignificant for the totalrevenues coefficient of the company size. Finally, the results of the additional analysis of the top and bottom30% indicated that the financial sub-sample were insignificant, and inconsistent with the results of the mainfinancial sub-sample companies.

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