Abstract
This study aims to examine the impact of the ownership structure on firm performance in the Jordan. This study employed the multiple-regression model and fixed regression effect to analyse the data. The sample included all Jordanian first market firms listed on the Amman Stock Exchange (ASE) from 2012 to 2018. The paper’s findings reveal a positive and significant relationship between institutional ownership and both accounting measure Return on Assets (ROA) and market measure Tobin’s Q (TQ). Other ownership structure types, such as concentration of ownership, also affect ROA and TQ. While managerial ownership shows a negative relationship with ROA, but there is no association with TQ. This study has broad and comprehensive practical implications that are good for policymakers. On the one hand, it adds to the debate on agency theory from the ownership structure and firm’s performance relationship. On the other hand, it helps the Jordanian Government formulate policies and regulations to strengthen corporate governance (CG), which increases the interests of all stakeholders in the Jordanian market.
Highlights
A firm’s performance is an essential key behind any success of countries
This study aims to examine the impact of the ownership structure on firm performance in the Jordan
While managerial ownership shows a negative relationship with Return on Assets (ROA), but there is no association with Tobin’s Q (TQ)
Summary
Financial performance (FP) is one of the available instruments used to maximise firm profits. It has become a source of concern for both shareholders and management. According to Omran et al (2008), the ownership structure represents a powerful incentive for managers to gain control over firms and sustain a better performance. This is due to various ownership structures extended to solving agency problems and increasing trust between the managers and the shareholders. There are many objectives that the Jordan stock market focused on it, such as constructing a formal structured system for firms to increase their capital and provide assistance to individuals to enabling them to trade their shares in the Jordanian market
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