The Impact of Product Diversification on Accounting Profits Maximizatio

Abstract

The main objective of this research is to investigate the impact of product diversification on accounting profits maximization of shareholding industrial companies listed in Amman Stock Exchange. This study also aims to determine whether the firm size have a moderating effect on this relationship. To achieve its objectives, the study used the panel data approach, which is a cross-section data for (40) industrial companies that included time series data for the period (2004-2018). Furthermore, the study used the ordinary least square (OLS) and two-stage least squares (2SLS), through the fixed effect model and the random effects model in order to achieve the objectives of the study. The results of the study show that product diversification does not have an effect on accounting profits maximizing of shareholding industrial companies. In addition, the study found that there are differences attributable to the firm size. The study recommends that managers of the corporations who aim to diversify their products use the optimum level of diversification when they adopt this policy.