PurposeThe purpose of this paper is to examine the effect of working capital management on firms’ performance for a sample of firms listed on a small emerging market, namely Amman Stock Exchange.Design/methodology/approachThe paper includes a conceptual as well as empirical analysis, in which data from a sample of listed firms for the period from 2000 to 2008 are analyzed to examine if more efficient working capital management improves firms’ accounting profitability and firms’ value. Cash conversion cycles as well as its components are used as measures of working capital management skills. In this study, two performance measures are used: one accounting and one market measure, believing that wealth maximization is shareholders’ main concern. To bring up more robust results, this study used more than one estimation technique, including panel data analysis, fixed and random effects, and generalized methods of moments.FindingsUsing robust estimation techniques this study found that profitability is affected positively with the cash conversion cycle. This indicates that more profitable firms are less motivated to manage their working capital. In addition, financial markets failed to penalize managers for inefficient working capital management in emerging markets.Originality/valueThe paper's originality and value lies in suggesting that policy makers in emerging markets need to motivate and encourage managers and shareholders to pay more attention to working capital through improving investors’ awareness and improving information transparency.

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This article examines empirically the effect of ownership structure on the corporate financing decision from the agency theory perspective. This article contributes to the literature by examining the static and the dynamic effects of managerial insiders and large shareholders' ownership on the capital structure. Based on panel data analysis for a sample of Jordanian industrial firms during the period 2001 to 2005, the study provides empirical evidence indicating that the debt ratio is negatively related to managerial ownership and inconclusively related to individual block-holders' ownership. Moreover, the study finds no significant relationship between debt ratio and institutional ownership. These results are consistent with the entrenchment behaviour of managers and passive monitoring by institutions. Finally, supporting the results of previous literature, this study reveals that the capital structure is affected by firm's profitability, size and growth.

Purpose-This paper examines whether earnings and its components are relevant and sufficient to bridge the gap between banks' market and book values, and also considers if bank efficiency is ''value relevant'' for banks valuation. Design/methodology/approach-This paper follows the value relevance literature methodology which tests for the difference between book and market values using a variety of indicators including net income and its components as well as bank efficiency (derived using DEA) and risk indicators. The regression models are estimated using OLS, random and fixed effects approaches for a sample of listed Jordanian banks between 1993 and 2004. Findings-The main findings of this paper are twofold. First, it is found that earnings (and its components) are value relevant and explain the gap between market and book values. Secondly, cost efficiency, as an economic performance measure, provides incremental information, not contained directly in banks financial statements, to the market. Overall it is found that the components of net income are more important than aggregate net income in explaining bank value. Furthermore, bank operational efficiency adds incremental information in explaining the gap between market and book value. These results support the view that stock prices aggregate signals received by the market as well as from firm's accounting systems. Practical implications-The study shows that bank efficiency indicators (along with more traditional accounting measures) help explain market values. Originality/value-This is one of only a limited number of studies that link bank efficiency to market valuation. It is the first, we believe, to do this for banks operating in an emerging economy.