The effect of company size on its stock returns An applied study in companies listed on the Iraqi Stock Exchange

Abstract

The research aimed to test the relationship between the size of the company, measured by the company’s market value and its total assets as an independent variable, and the company’s stock return as a dependent variable, in addition to determining the effect of the independent variable on the dependent variable. In this research, the companies in the research sample were classified according to two criteria. The size of the company by its two dimensions adopted in the research: (market value and total assets), and its stock return. The research problem, which was crystallized through reviewing previous cognitive efforts, was summarized by answering the following main question: Is there an effect of the size of the company on its stock return? This is due to the fundamental impact of the company's size in determining stock returns, in addition to the importance of the company's stock return in determining its characteristics. The quantitative analytical method was used on data collected from the financial statements and statements related to the research sample companies from the website of the Iraq Stock Exchange and the Iraqi Securities Commission. By using pooled cross-sectional time series models (Panel Data), the results showed the suitability of the fixed effects model for the relationship between company size and its stock return, as it was found that there is a direct significant effect of the size of a company on its stock return, and that company size explains (58%) of the stock return variance. In addition, there is a strong direct relationship between the size of the company and the return of its shares