Proceedings of 7th Annual American Business Research Conference
23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5
The Performance of Value Stocks and Growth Stocks: An Applied
Study on Amman Stock Exchange
Samah Al-Aker and Nedal Al-Fayoumi*
This study examines the performance and risk associated with value and growth stocks in Amman
Stock Exchange (ASE). For each year under study, stocks are sorted and organized into quartiles of
approximately the same size based on their price to book ratio (P/B). Among the four portfolios formed,
portfolio one with the lowest price to book ratio (P/B) is considered to be the value portfolio and portfolio
four with the highest price to book ratio (P/B) is considered to be the growth portfolio. In order to test
the size effect, stocks are also sorted and grouped into four portfolios of approximately the same size
according to their market capitalization. Small stocks are grouped into quartile one which has the lowest
market capitalization and stocks with the largest market capitalization are grouped into quartile four.
The study concludes that, in agreement with the literature, value stocks outperform growth stocks in
ASE during the study period. The evidence also suggests that value stocks are somehow riskier than
growth stocks. On the other hand, weak evidence has been detected for the support of the small size
effect.
Key words - Value Stocks, Growth Stocks, Size Effect, Portfolio, Price to Book Ratio.
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Samah Al-Aker, Corporate Finance Specialist, CFA Society, Amman- Jordan, Samah_a_2000@yahoo.com
Nedal Al-Fayoumi*, Professor of Finance, Faculty of Business and Economics, Qatar University, P.O. Box 2713, DohaQatar, nedal.alfayoumi@qu.edu.qa, Telephone: +974-70505585, Fax: +974-4403508, *The Corresponding Author