The continual impact of profitability indicators on stock market prices of listed Industrial Companies in Jordan

Abstract

This study examined how Amman Stock Exchange evaluates the effect of earnings yield and dividends yield on stock market prices and determine the duration of this evaluation. The study period extends for 5 years, from 2012 to 2016, and the study sample consists of 41 industrials publicly held firms listed in Amman Stock Exchange. The study data analysis shows the significant effect of the earnings yields on the stock market price at 1% level in the earnings realization year, while the dividends yield does not affect the stock market price at 5% significant level for the same year. This model shows that changes in the independent variables interprets 5% of the change in the dependent variable. And the significant effect of the earnings yields and the dividends yield on the stock market price at 1% level in the first year follows the earnings realization year. This model shows that the change in the independent variables interprets 22% of the change in the dependent variable. Also, the significant effect of the dividends yields on the stock market price at 1% level in the second and third years follows the earnings realization year, with a coefficient of determination 20% and 19.8% respectively. In the fourth year follows the earning realization year the dividends yield does not affect stock market price at 5% significant level, and the earnings yield does not affect stock market price after the first year follows the earning realization year at 5% significant level.

Keywords: Dividends Yield, Earnings Yield, share prices, Jordanian Industrial Publicly- Held Companies.