The Impact of Corporate Governance on the Profitability of the Listed Companies in Jordan over the period from 2010 to 2014

Abstract

This study aimed to provide evidence of whether or not the corporate performance indicators of the Jordanian companies listed at Amman Stock Exchange are affected by corporate governance variables that were proposed, and to provide important indicator of the relationship of corporate governance dimensions (Board size and ownership structure) and performance that can be used by the Jordanian firms to solve the agency problem. The study sample consists of 90 listed Jordanian firms over the period from 2010 to 2014, the first 30 firms are from industrial sector, the second 30 are from financial sector ,and the last 30 firms are from services sector, the characteristic of the sample is cross-sectional and of time series. Multi regression analyses were applied for each sector and for all sectors together. The study found that all listed Jordanian companies together and industrial sector have a significant positive relationship between corporate governance variables on one side, and return on assets, return on equity on the other side, but price on earnings ratio is not affected by corporate governance variables in all listed companies and in each sector. Return on assets in finance and services sectors is the only performance variable that is affected by corporate governance variables.

Keywords: corporate governance, corporate performance, board size, ownership structure