Analyzing the Relationship Between Cash Flows and Earnings Per Share: An Empirical Study of Insurance Companies Listed on the Amman Stock Exchange (2016–2020)

الملخص

This study aimed to investigate the relationship between cash flows and earnings per share for insurance companies listed on the Amman Stock Exchange

The study used a random sample of insurance companies listed on the Amman Stock Exchange during (2016-2020), 27 insurance companies, and to test the study hypotheses, the study used the multiple regression method through the SPSS program. The study included a dependent variable (stock price), and independent variables (operating cash flows, cash flows from investment activities, cash flows from financing activities, and net cash flows).

The study found that the relationship between earnings per share and cash flows for different activities varies from year to year in terms of whether there is a correlation or not. The coefficient of determination or explanation did not exceed 36.6%, and this percentage is considered weak because the independent variables did not explain the dependent variable (EPS) within the limits of this percentage, meaning that there are other variables that are better in explaining the dependent variable.

The study recommended that more attention should be paid to the statement of cash flows, and to guide users of financial statements to understand and analyze it. The study also recommended researching other variables and formulas capable of predicting the change in EPS.