Measuring Market Valuation of Amman Stock Exchange Industrial Sectors: Tobin’s Q Ratio as Investors’ Market Performance Indicator

Abstract

This research investigation purported to present the market valuation of Amman Stock Exchange Industrial Sectors utilizing the Tobin’s Q ratio to serve as performance indicator among Jordanian industrial firms. The most specific research objectives addressed in this research work were to evaluate the Amman Stock Exchange Industry market performance, present the trend in Q ratio valuation during the study period, and to recommend some guiding principles to enrich investors in making the right investment decisions.

The research paper is anchored on the concepts of Chung and Pruitt (1994) who have developed a simple approximation of Tobin’s q. For the methodology, the researchers made use of the 49 sample companies from all industrial public traded company sectors listed in the Amman Stock Exchange (ASE) clustered based on the Amman Stock Exchange classification as published in their publications inclusive of 2008-2015. The sectors included the Pharmaceutical & Medical Industries, Chemical Industries, Paper & Cartoon Industries, Food & Beverage, Tobacco & Cigarettes, Mining & Extraction Industries, Engineering & Construction, Electrical Industries, Textile, and Leather & Clothing.

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