The Effect of Profitability on the Stock Markets Value an Applied Study on a Sample of Jordanian Commercial Banks

Abstract

This study aimed at finding if there is a relationship between the profitability of Jordanian commercial banks (JCBs) measured by the profitability ratios (ROI, ROE, and P/E ratio) and stock market price. The correlation coefficient has been used to explain how the change in stock price Of the (JCBs) has contributed to their profitability. The researcher used the T-test to test the hypotheses, and the P value to test the statistical significance of the results. The researcher found that the market price of (J CBs) is not affected to a great degree by its profitability, in addition to the fact that speculative behavior dominates the transactions of Amman Stock Market (ASE). The main recommendations of the research underscored the importance of greater degree of financial transparency, in addition to stimulating the institutional investor to have a greater stake in ASE. The study also recommended that foreign investment and regulation changes that may help the prices in ASE should be encouraged in order to reflect the actual performance of the JCBs and other firms,