The Moderating Impact of Major Shareholding of Equity on Operational Performance Efficiency and Firm Value Relationship: The Evidence of the Manufacturing Listed Firms at ASE

Abstract

The study objects for determining whether a firm value is affected by the operational efficiency of performance, and to determine whether major shareholding moderates the effect relationship of operational efficiency on firm value. Secondary data covering the period starting from 2011 and ending with 2020, attributed to 28 out of 32 listed manufacturing firms at the Amman Stock Exchange, had been collected and used in the analysis. Five indicators of operational efficiency, as an independent, are taken into consideration in the study, including inventory turnover, receivables turnover, total assets turnover, cash flows from operations, and working capital, whereas Tobin’s Q, is used as an indicator for firm value, as the dependent variable. Major shareholding is represented by those shareholders that are having 5 percent or more of the entire number of shares outstanding and is used as a moderator, while firm size, which is measured using the natural logarithms of total assets, is used as a control variable. Using the multiple and the hierarchal regression methods in data analysis and hypotheses testing, the study shows that operational efficiency of performance has a significant impact on firm value, and it plays a clear role and major shareholding plays a significant moderating role on the effective relationship of operational efficiency on firm value. More investigation of the effects of operational efficiency of additional aspects of performance, on firm value, is strongly recommended.

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