The Effect of Firm's Age, Size and Growth on Its Profitability: Evidence from Jordan

Abstract

This study aims at testing the effect firm's age, size and growth on its profitability based on the financial data of (22) Jordanian insurance firms that are registered in  the Amman Security Exchange (ASE)  during the period (2008-2017). They represent 95.2 % of insurance firms. The study relied on secondary data of insurance firms that have been published on their website and on  ASE website In the study, the mean, standard deviations were used to describe the characteristics of the variables. Simple regression analysis was used to test the study's hypotheses. Simple. the skewness test of all variable is used to know if they have a normal distribution.The study shows that there is an insignificant effect of the insurance firm's age, size, and growth on its profitability.  It recommends financial managers to analyze the relationship between a firm's age, size, growth, and profitability before making any decision in the fields of expanding business, renewing assets, manufacturing high-quality products and appointing new employers. In a recession period, managers should not adopt a strategy to achieve high growth in the short run, they should also reduce the size of the firm's operations. These procedures are important for these firms to maintain a balance between growth and profitability.

Keywords: Firm's Age, Firm's Size, Firm's Growth, and firm's Profitability.

DOI: 10.7176/EJBM/12-5-10

Publication date: February 29^th 2020