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Mohammed Ibrahim Sultan Obeidat



Authors and WSEAS

Mohammed Ibrahim Sultan Obeidat


WSEAS Transactions on Business and Economics


Print ISSN: 1109-9526
E-ISSN: 2224-2899

Volume 18, 2021

Notice: As of 2014 and for the forthcoming years, the publication frequency/periodicity of WSEAS Journals is adapted to the 'continuously updated' model. What this means is that instead of being separated into issues, new papers will be added on a continuous basis, allowing a more regular flow and shorter publication times. The papers will appear in reverse order, therefore the most recent one will be on top.

Volume 18, 2021


The Validity of Modigliani-Miller Theorem at the Commercial Banking Industry of Jordan

AUTHORS: Mohammed Ibrahim Sultan Obeidat

DOI: 10.37394/23207.2021.18.88
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ABSTRACT: The study objects for investigating whether the findings of Modigliani-Miller Theorem (1958-1963), are valid in the environment of listed commercial banks at Amman Stock Exchange. To achieve the objective of the study, data of 13 out of a total of 15 listed commercial banks, covering the period (2010-019), had been collected and tested, using descriptive statistics and the ordinary least square method. The analysis of the data and hypothesis testing leads to an existence of a significant positive impact of debt on the firm market value. Opposite to Modigliani-Miller theorem, the study finds that debt is relevant to the bank market value, and it has a positive significant on bank market value. The conclusion is not in conflict with the finding of Modigliani-Miller 1958, where the authors assumed free tax, while the commercial banks of Jordan are subject to tax. Therefore, the finding of the current study are consistent with the adjusted Modigliani-Miller 1963 theory. More studies taking into consideration different industries and different business environments are strongly recommended.

KEYWORDS: Capital structure, Debt, Equity, Financial Leverage, Firm Market Value, and Modigliani-Miller Theorem.

Wseas Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 18, 2021, Art. #88, pp. 929-940


Copyright Β© 2021 Author(s) retain the copyright of this article. This article is published under the terms of the Creative Commons Attribution License 4.0