Author(s): Mohammed Ibrahim Sultan Obeidat
The study objects for investigating the impact of profitability on share market value, in addition to examining the moderating effect of firm size on the effect relationship of profitability on share market value, of the listed commercial service firms at Amman Stock Exchange. To achieve the objectives of the study, the secondary data that are covering the period 2010-2019, of the entire listed 9 commercial service firms at Amman Stock Exchange, had been collected and used in the analysis and hypotheses testing. The closing price of the firms is used as a measure for share market value, while return on assets is used as a measure of firm profitability. Firm size is used as a moderating variable on the relationship between profitability of firms, as independent variable of the study, and share market value, as dependent variable. The natural logarithm of total assets is used as a measure of firm size. To check whether the data is appropriate for analysis, the normal distribution, multicollinearity, Durbin Watson test, and correlation test, had been done. Descriptive statistics including the mean, standard deviation, minimum and maximum value for each of the dependent, independent, and moderating variables, had used in data description. In addition, the simple linear regression method is employed in testing the first hypothesis, and the hierarchal multiple linear regression methods, had used in testing the second hypotheses of the study. The study hypotheses are tested at 0.95 level of confidence or 0.05 (1-0.95) coefficient of significance. The study shows that profitability has a strong positive significant effect on share market value of the included firms within the sample. In addition, the study demonstrates that firm size has a significant moderating effect on the relationship between profitability and share market value.