The impact of the economic growth rate and the foreign investment ratio on the financial performance of Jordanian public shareholding industrial companies

Type of the article: Research ArticleAbstractThis study examines the impact of the Economic Growth Rate and the Foreign Investment Ratio on the financial performance of Jordanian public shareholding industrial companies. In doing so, it also accounts for a set of control variables, particularly firm size, firm age, and financial leverage. Financial performance is measured through Return on Equity and Return on Investment, using a panel dataset spanning 2014 to 2023 from 26 companies listed on the Amman Stock Exchange, obtained from the Amman Stock Exchange, the Securities Depository Center, the Jordan Securities Commission, and the World Bank. This study uses a quantitative analytical framework based on random effects panel regression models, estimated using Stata 17 software. The results illustrate that Foreign Investment Ratio has a statistically consequential and positive effect on both ROE and ROI, while there was no statistically significant effect of Economic Growth Rate on both ROI and ROE. Regarding the control variables, the effect of financial leverage on ROI was negative, while financial leverage had no effect on ROE. In addition, Age had a positive effect on both ROI and ROE, while Size had a positive effect on ROE but no effect on ROI. This study contributes novel insights by exploring the interaction between macroeconomic growth and foreign investment in shaping corporate financial outcomes in emerging markets. It further offers implications for investors, policymakers and corporate managers aiming to leverage economic and investment environment to enhance firm performance.