Abstract
The current study aims at providing empirical evidence concerning the relationship between the ownership structure and performance of the shareholding companies listed on the Amman Stock Exchange (ASE). To measure the ownership structure, used institutional and block holders ownership. The performance is measured by using Tobin’s Q (TQ). This study also used a moderating variable which is board independence. To achieve the objectives of the study, this study used the panel data method to analyze data for a sample of 180 companies listed on Amman Stock Exchange (ASE) for the period from 2009 to 2017. The findings show that the ownership structure mechanisms have a significant influence on firm performance measure by (TQ). So, institutional ownership shows a significant positive relationship with (TQ), however, the findings show block holders ownership have a significant negative relationship with (TQ). On another hand, the moderating effect of board independence has a significant positive on the relationship between block holders ownership and (TQ) and has a significant negative on the relationship between institutional ownership and (TQ). The findings of this study confirm empirical research continuing to find a new performance measurement to gain a real form of firm performance. Therefore, the evidence of this study provides empirical evidence to stakeholders, managers and interested parties to support them for its decision.
Highlights
Research Methodology Study Population Sample and Resources of Data The present study investigates the link between corporate governance represented by ownership structure and firm performance expressed by Tobin's Q in Jordan
The samples were collected based on the availability of the companies which had already been listed during the period of the investigation
The objective of this study is to investigate the effect of ownership structure as one of the important corporate governance mechanisms on firm performance and investigate moderating effect of board independence on that relation, for Jordanian companies listed on Amman Stock Exchange (ASE)
Summary
Corporate governance is a group of a combination of policies, laws, and instructions impacting the way a firm is managed and its control, by protecting the interest stakeholders to avoid conflicting interests (Buallay, Hamdan, & Zureigat, 2017). Oliver (1995) stated that governance need arises due to the changing nature of the business environment and shareholders are unable to write comprehensive contracts entailing responsibilities, duties, compensation of the controlling group. Fernando (2012) stated that “corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment”.As corporate governance is a governing tool that helps stakeholders align their objectives to organizational goals (Stout & Blair, 2017). The management examines the investment risk and the possibility of default before making any investment projects This conflict of interest comes at a cost known as agency cost (Husain, Hazoor, & Sabir, 2014; Hsu & Wen, 2015; Abedalqader, Abdulmohsen, & Alssad, 2016; Aguilera, Judge, & Terjesen, 2018). The conflict of interests between principals and agents in modern corporations has intrigued economists for a long time. To mitigate this problem, classic works in agency theory (Jensen & Meckling, 1976), propose the use of equity holdings of the firm instead of cash compensation to better align the interests between managers and shareholders. Despite the theoretical and practical importance of agency theory, convincing empirical evidence has been elusive and there is a lack of consensus on whether ownership structure matters for firm performance (Ducassy & Guyot, 2017)
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