The Relationship Between Board Size and CEO Duality and Firm Performance: Evidence from Jordan

Almontaser Abdallah Mohammad Qadorah

32 citations0/0 files storedInternational Journal of Accounting Finance and Risk Management

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Corporate Finance and Governance Gender Diversity and Inequality Corporate Governance and Financial Management

Abstract

This study investigates the relationship between board of directors’ characteristics namely (board size and CEO duality) and firm performance among Jordanian listed firms. Firm performance is measured using return on assets (ROA). Due to limited studies regarding corporate governance practices and firm performance has been done in developing countries like Jordan. Importantly, these studies have also been limited in their scope due to restricted and particularized focus on factors hindering firm performance in the industrial sector of Jordan. This study covers industrial listed firms on the Amman Stock Exchange, Jordan for the year 2013 as a sample. Multiple regression analysis is used to test the hypotheses and to examine the relationship between board of directors’ characteristics namely (board size and CEO duality) and firm performance. The findings showed that board size is significantly and positively related to ROA. On the other hand, CEO duality is significantly and negatively related to ROA. These results indicate that corporate governance plays a vital role in enhancing firm performance and reducing agency conflict. Further, regulator bodies in Jordan should increase the effectiveness of corporate governance in industrial Jordanian firms in order to enhance the quality of financial reports. In addition, this study opens up avenues for more studies on firm performance not only in Jordan, but also in other countries where this area of study is lacking.

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References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1996Theory of the firm; managerial Behavior, Agency Costs, and Ownership Structure 2009Board Structure and Firm Performance: Evidence from India's Top Companies 2005Boards of Directors: Utilizing Empirical Evidence in Developing Practical Prescriptions 2013Effect of board size and promoter ownership on firm value: some empirical findings from India 2012Board structure, ownership structure and firm performance: A study of New Zealand listed-firms 2007The relationship between board size, board composition, CEO duality and firm performance: Experience from Ghana 2015CORPORATE GOVERNANCE AND CAPITAL STRUCTURE DYNAMICS: AN EMPIRICAL STUDY

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