Universal Journal of Accounting and Finance Vol. 7(2), pp. 50 - 65
DOI: 10.13189/ujaf.2019.070203
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Effect of Net Cash Flows on Investors' Decisions on Companies Listed in Amman Stock Exchange during the Period of 2001–2017: A Case Study on Industry and Service Sectors


Ateyah Mohammad Alawneh *
Faculty of Business, Tafilah Technical University, Jordan

ABSTRACT

This study aims to estimate the impact of net cash flows on investors' decisions on industrial and service companies listed in the Amman Stock Exchange during the period of 2001–2017. The study is based on data from the accumulated annual reports of the previously mentioned industrial and service companies. The study tests autocorrelation by using the Breusch–Godfrey serial correlation Lagrange multiplier test, and the analysis shows no autocorrelation between the variables of the study. Moreover, the study tests the stability of the variance by using the autoregressive conditional heteroskedasticity test, and the results show the absence of a variation problem among the study variables and models. Thus, they do not suffer from measurement problems. Hypotheses testing through the measurement analysis of the industrial sector show a negative impact of net investment cash flow on investors' decisions. However, net financing cash flow has a positive effect on investors' decisions, while net operation cash flow has no statistically significant effect on investors' decisions. The analysis of the service sector reveals a statistically significant negative effect of net operation cash flow on investors' decisions, whereas net financing cash flow has no effect on investors' decisions. The study concludes with a set of recommendations, the most important of which is the need for companies to pay attention to net investment cash flows to buy companies with fixed assets and to use traditional financing alternatives such as murabaha, musharaka, and Islamic sukuk hedging instruments.

KEYWORDS
Investor's Decision, Investment Cash Flows, 0peration Cash Flows, Financing Cash Flows, Industry Sector, Services Sector

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Ateyah Mohammad Alawneh , "Effect of Net Cash Flows on Investors' Decisions on Companies Listed in Amman Stock Exchange during the Period of 2001–2017: A Case Study on Industry and Service Sectors," Universal Journal of Accounting and Finance, Vol. 7, No. 2, pp. 50 - 65, 2019. DOI: 10.13189/ujaf.2019.070203.

(b). APA Format:
Ateyah Mohammad Alawneh (2019). Effect of Net Cash Flows on Investors' Decisions on Companies Listed in Amman Stock Exchange during the Period of 2001–2017: A Case Study on Industry and Service Sectors. Universal Journal of Accounting and Finance, 7(2), 50 - 65. DOI: 10.13189/ujaf.2019.070203.