The Journal of Social Sciences Research ISSN(e): 2411-9458, ISSN(p): 2413-6670 Special Issue. 5, pp: 821-826, 2018 URL: https://arpgweb.com/journal/journal/7/special_issue DOI: https://doi.org/10.32861/jssr.spi5.821.826 Academic Research Publishing Group *Corresponding Author 821 Original Research Open Access Effect of Cash Flows on the Market Value of Jordanian Industrial Companies Stocks Mohammad Husam Odeh Faculty of economics and business, Jadara University, Jordan Fadi Mohammed Alshannag Faculty of economics and business, Jadara University, Jordan Bilal Eneizan * Faculty of economics and business, Jadara University, Jordan Munawer Frieh Haddad Faculty of economics and business, Jadara University, Jordan Hebah Zaki Makhamreh Faculty of economics and business, Jadara University, Jordan Abstract The current study aims to assess the effect of cash flows of activities (operational, investment and financial) on market values in industrial companies stocks. The study adopted secondary sources for data collection from the annual reports of Jordanian industrial companies (52 companies) for the period 2007-2016. Furthermore, the study followed the descriptive analytical approach for data analysis in addition to utilizing the Gretle Stata model to test hypotheses. Results indicated a positive statistically significant effect for each of operational and investment activities on market value of industrial companies, while there was a negative relationship between financial activities and market value of industrial companies. Keywords: Cash flows; Market value; Industrial companies stocks; Jordan. CC BY: Creative Commons Attribution License 4.0 1. Introduction The significance of financial statements differs based on accounting concepts and principles and at the time the balance sheet and income statement stand prominently among the financial statements regarding importance. This importance has declined because of management’s provision of misleading information to cover any deficit in its performance and to facilitate its financial position for the targeted group. However, recently, there has been a great interest in cash flow and the company's ability to generate cash, so much so, the interest has shifted to cash flow statement. This statement is an analytical tool and an extension of the various financial tools and it explains the actual company cash inflows and outflows generated from the operational activities in addition to investment and financial activities. Added to this, the statement offers important indexes through which the financial performance of the company in general and profits quality in particular are evaluated and it also shows investment returns' size (Qaddoumi and Alkeelani, 2006). A stock's market value is determined based on supply and demand strength through selling and purchasing orders and the market value is expressed by the stock price in the market, which is affected by several factors. These factors include companies' related factors in addition to political, economic, environmental and legislative factors, which are in turn, reflected on a stock's return and the extent of risk it faces (Mansour, 2001; Matar and Eneizan, 2018; Qaddoumi and Alkeelani, 2006). This study aims to analyze the effect of cash flows with its all activities (operational, investment and financial) on market values among industrial companies listed in Amman Stock Exchange for the period 2007-2016. The results of this study offer financial information that can serve all concerned parties such as, management, shareholders, investors and researchers. In addition, the study offers researchers and specialists, in the field, the opportunity to conduct more in-depth research and studies. Furthermore, this study is among the rare studies that have examined the relationship between cash flows and companies' market value as majority of earlier studies in this field has focused on the Jordanian banking sector, and relied on net profit, assets' return and property right as indexes for evaluating financial performance, while ignoring the stock price as one of the most important performance indexes.