The Effect of Cash Flow on Share Price of the Jordanian Commercial Banks Listed in Amman Stock Exchange

Khanji, Ibrahim Marwan; Siam, Ahmad Zakaria

doi:10.5539/ijef.v7n5p109

Cited by 11 publications

(11 citation statements)

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“…The finding of this study revealed that positive but insignificant relationship between operating cash flow and value of listed manufacturing firms in Nigeria. This is also the position of Khanji and Siam (2015) in the context of Jordan, while Al-Zararee and Al-Azzawi (2014), Girish and Desai (2017); Lyndon and Paymaster (2016), as well as Wanjiru and Oluoch (2016) reported significant positive impact. On the other hand, the studies of Kadioglu et al (2017); Brush et al (2000); Park and Jang (2013); Heydari et al (2014); and Wang (2010) reported significant negative effect of free cash flow on firm value (Tobin's Q) but Khraywesh, (2001) concluded that no significant relationship exist between the net cash flows and stock's market value.…”

Section: Discussionmentioning

confidence: 71%

Shareholders return and value of manufacturing firms listed on the Nigerian stock exchange

Oyeyemi¹,

Enyi²,

Emmanuel³

2019

Afr. J. Bus. Manage.

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The attainment of going concern concept of an entity relies heavily on its ability to maximize the wealth of its shareholders and value. The prospect of a firm to investors is a function of return, which signals to the market its good governance. The study examined the influence of shareholders' return on the value of manufacturing firms listed on Nigerian Stock Exchange using annual reports and accounts of 36 selected firms for a period of twenty years, between 2007 and 2016 (720 firm year observations). The results of the multivariate regression analysis (fixed effect) revealed that past dividend, agency cost, debt-equity ratio, and size have significant positive effect on market capitalization of listed manufacturing firms in Nigeria; while earnings per share and sales growth have insignificant negative influence on value of a firm though, the magnitude is immaterial. The study concluded that managers should look beyond the signaling effect of dividend, but place the interests of the key stakeholders (shareholders, management, employees, and loan holders) as well as the growth and expansion of the business at the centre of their decision-making. Especially on the proportion of earnings to be paid as dividend and the nature of dividend policy to be adopted to enhance its value.

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Section: Discussionmentioning

confidence: 71%

Shareholders return and value of manufacturing firms listed on the Nigerian stock exchange

Oyeyemi¹,

Enyi²,

Emmanuel³

2019

Afr. J. Bus. Manage.

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“…It is highly possible that there would be no match between net income in income statements and operating cash flows in cash flow statements due to non-cash expenses such as depreciation (Khanji and Siam, 2015). Operating cash flows could be greater or less than net income.…”

Section: Theoretical Framework and Literature Reviewmentioning

confidence: 99%

“…This implies that accounting information serves as a guide to investors' investment decisions. Khanji and Siam (2015) indicated a limited effect of operating, investing, and financing cash flows on Jordanian commercial banks' share market values. Consequently, more concern is needed regarding cash flow behavior when assessing share prices.…”

Section: Theoretical Framework and Literature Reviewmentioning

confidence: 99%

The Relationship between Both Accounting Earnings and Cash Flows, and Cash Dividends for Commercial Banks Operating in Jordan

Abdallah¹,

Abdulrazzak²,

Mohammed³

2020

IJEBA

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In this paper, we apply the analytical approach to test hypotheses using the published financial statements for the period (2010-2018). The data is analyzed by employing the statistical program (SPSS). Researchers mainly use the (OLS) multiple linear regression approach to analyzing the study sample's financial data, which consists of (13) Jordanian commercial Banks listed on the Amman Stock Exchange. Findings: The study concludes that there is no relationship between changes in operating, investing, and financing cash flows and changes in cash dividends of commercial banks operating in Jordan. However, there is a statistically significant relationship between changes in earnings and changes in cash dividends. Furthermore, the results show that the size of liabilities affects only the relationship between accounting earnings changes and changes in cash dividends. Practical Implications: Jordanian commercial banks should logically link cash flows and accounting earnings when making cash dividend decisions, as relying on cash flows is important in knowing their ability to fulfill obligations and determining liquidity. Originality/Value: Several controversial studies have examined the ability of earnings and cash flows to judge non-financial firms' performance. The value of this paper is to report the first direct test of the link between both accounting earnings and cash flows from operating, investing, and financing activities from one side, and cash dividends from another side for commercial banks operating in Jordan, and the effect of liabilities on this relationship.

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“…The results of the study showed that there is a significant effect of both operating cash flows attributable to total assets and operating cash flows attributable to total liabilities on the financial performance measured by earnings per share. The study of (Khanji& Siam, 2015) examined the effect of operating, investment and financing cash flow on the shares market value of (13) commercial banks listed on the Amman Stock Exchange during the period 2010-2013. The results of the study showed a significant positive effect of all operating, financing and investment cash flows on the shares market value.…”

Section: Literature Reviewmentioning

confidence: 99%

The Effect of Financial Ratios Derived From Operating Cash Flows on Jordanian Commercial Banks Earnings per Share

Abualrob¹,

Maswadeh²

2019

IJFR

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This study tries to investigate the effect of operating cash flows ratios, which are (operating cash flows attributed to net income, operating cash flows attributed to credit facilities, and operating cash flows attributed to deposits) on earnings per share. The study was applied on Jordanian commercial banks listed on the Amman Stock Exchange during the period (2013)(2014)(2015)(2016)(2017), and multiple regression analysis was used to test the study hypotheses.The most important results revealed by the study were: the ratio of operating cash flows attributed to credit facilities is considered as the most important ratio derived from the cash flow statement helping in determining the earnings per share in Jordanian commercial banks. And there is a statistically significant effect of operating cash flows attributed to net income, operating cash flows attributed to credit facilities, and operating cash flows attributed to deposit on earnings per share in Jordanian commercial banks. Study ProblemCommercial banks, like other companies, aim to make profits, so, naturally, banks' profits are achieved through the size of credit facilities granted to others, but their flexibility to grant credit facilities depends on the amount of liquidity available which depends on the bank's ability to generate cash flows, especially operating ones. Thus, the question remains regarding the amount of operating cash flows that enable banks to meet their commitments and their ability to face expected and unexpected withdrawal of deposits especially current deposits, also not rejected credit facilities covered by sufficient guarantees and through them banks can achieve financial earnings that are reflected in their profits and earnings per share which is an important financial performance indicator for current shareholders and prospective investors. Therefore, this study has been conducted to examine the following key question: -Is there a statistically significant effect of financial ratios derived from operating cash flows attributable to-net income, credit facilities, and deposits-on earnings per share? The Significant of the StudyThe analysis of cash flows has great importance for business entities due to its important role played in the planning process, making decisions related to those entities and assisting the management in determining the suitability and adequacy of operating cash flows to the company's needs. Also, it helps in providing necessary information about the company's operating cash flow activities, and assessing the success of operating policies and verifying effectiveness. Cash flows are providing an important indicator for earnings stability in future periods as well as their significance in providing predictability for company continuity or failure.Hypotheses can be explained in the study model as follows:

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The Effect of Cash Flow on Share Price of the Jordanian Commercial Banks Listed in Amman Stock Exchange

Cited by 11 publications

References 1 publication

Shareholders return and value of manufacturing firms listed on the Nigerian stock exchange

Shareholders return and value of manufacturing firms listed on the Nigerian stock exchange

The Relationship between Both Accounting Earnings and Cash Flows, and Cash Dividends for Commercial Banks Operating in Jordan

The Effect of Financial Ratios Derived From Operating Cash Flows on Jordanian Commercial Banks Earnings per Share

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