The Role of Innovation in Maximizing Accounting Profits and the Growth Rate of the Market Value of the Shares

Eshaq M. ALShaar, Nidal O. Zalloum

Abstract


This study aimed to identify the role of innovation in maximizing accounting profits and the growth rate of the market value of shares in the non-financial Jordanian corporations. The sample of the study has included (59) corporations; in which (28) are related to services sector, and (31) are related to industrial sector, the population study consists of (54) service corporations, and (70) industrial corporations during period (2008-2011), and the number of hits (112), are related to services sector, and (124) are related to industrial sector. The variables of the study consisted of innovation as an independent variable, and accounting profits (earnings per share, return on investment, return on equity) and the growth rate of the market value as a dependent variables. Simple Linear Regression was used, and the Hierarchical Interaction Regression was also used to test the hypotheses. The study found that creativity positively affect accounting profit in the three models (earnings per share, return on investment, return on equity) in the Jordanian non-financial corporations, and that innovation does not affect the growth rate of the market value of shares, the study also found that there are no differences attributable to the size of the corporations.The findings of the study showed that effect of innovation on maximizing the accounting profits differs according to the differences in financial leverage levels, while innovation is not affected by the differences in market value.

Keywords


Innovation, Accounting Profits, Market Value of the Shares, Financial Leverage

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