Jordanian Firms Research Articles

Antecedents of adoption blockchain: Empirical study in Jordanian firms

The increasing popularity of intelligence systems in accounting and auditing domains has led to the interest towards drivers of blockchain technology adoption. Consequently, this empirical study inspected the antecedent constructs with direct and indirect impact on blockchain technology adoption in the accounting domain. Data were gathered from 346 accountants employed in Information technology (IT) companies, through an online survey. Structural equation modeling with Smart PLS 4 was employed for research model testing. Out of thirteen proposed direct hypotheses, twelve were accepted. Mainly, the obtained empirical results confirmed effort expectancy impacting blockchain technology adoption the most. Furthermore, the obtained results also confirmed the mediation role of effort expectancy and performance expectancy.

Does the covid-19 pandemic create an incentive for firms to manage earnings? The role of board independence and corporate social responsibility

It is argued that managers took advantage of Covid-19 pandemic lockdowns and remote auditing and used earnings management (EM) practices extensively. Furthermore, the Covid-19 pandemic created new unsearched crisis-related incentives. This study, therefore, tests whether Covid-19 created a new incentive for managers to manipulate earnings. It also examines the association between corporate social responsibility (CSR) and board independence and EM during Covid-19. A data set of 384 firm-year observations from 2018 to 2021 of non-financial firms listed on the Amman Stock Exchange (ASE) was investigated. Results indicate that Jordanian firms engaged in EM during Covid-19 considerably more than when compared to pre-Covid-19, suggesting that Covid-19 created a new incentive for managers to manipulate earnings. Furthermore, Jordanian firms used income-increasing EM much more when compared to income-decreasing EM. However, when taking Covid-19 into account, no significant association was found between board independence and EM. In addition, the ability of CSR to constrain EM decreased. This adds to the current debate in the literature that even well-established monitoring mechanisms like board independence and CSR are unable to constrain EM practices in a unique business environment caused by Covid-19.

Does corporate sustainability disclosure mitigate earnings management: empirical evidence from Jordan

AbstractThis paper aims to investigate the relationship between sustainability disclosure practices and earnings management in the Jordanian context. Based on an analysis of 66 non-financial firms listed on ASE, spanning the period of 2017–2020. The findings revealed that companies' compliance with the disclosure of sustainability improves their ethical behavior, which limits earnings management practices and increases the reliability of their financial statements. The findings have implications for regulators, corporate executives, practitioners, policymakers, top management, and business partners. More corporate sustainability practices present more trustworthy information and more sustainable performance of the economic. To the best of the authors’ knowledge, this is the first study to examine the relationship between the extent of sustainability disclosure and earnings management in Jordanian firms. Moreover, two models were used for earnings management, which adds value to the existing literature.

Ownership structure and corporate cash holdings in Jordan: the role of government ownership

ABSTRACT Using a dataset of 107 listed firms in Jordan from 2009 to 2018, we employed the generalized method of moments (GMM) to examine the effect of ownership structure on the level of corporate cash holdings. We found that higher government ownership is associated with higher cash holdings. On the other hand, different forms of ownership, namely block holding and individual and foreign ownership, were found to be insignificant. We further examined why firms in Jordan hold cash, concluding that when the level of government ownership rises, firms do not employ cash reserves for investments nor for dividend payments, which in light of governmental political purposes could be a clear indicator of agency problems.

The impact of Industry 4.0 capabilities on operational performance: the mediating effect of supply chain ambidexterity

PurposeThe current work sought to investigate the mediating effect of supply chain ambidexterity on the relationship between Industry 4.0 capabilities and operational performance of manufacturing firms in Jordan.Design/methodology/approachData collection was carried out through a survey with 253 respondents from manufacturing firms in Jordan through the first quarter in 2023. The quantitative approach and structural equation modeling (SEM) were applied to analyze the collected data. Dynamic capabilities view (DCV) theory was the adopted theoretical lens for this work.FindingsThe results demonstrated that Industry 4.0 capabilities positively and significantly affect exploration, exploitation and operational performance. In addition, the results confirmed that exploration and exploitation positively and significantly affect operational performance. Further, it is also found that exploration and exploitation in the supply chain positively and significantly mediate the relationship between Industry 4.0 capabilities and operational performance.Originality/valueThis study focuses on this gap to deepen the understanding of operational performance in a recent manufacturing environment under various factors and perspectives (Industry 4.0 capabilities and supply chain ambidexterity).

The effect of ownership structure on tax avoidance with audit quality as a moderating variable: evidence from the ailing economics

Purpose The purpose of this study is to shed light on the relationships between the different types of ownership structure and tax avoidance activities and examine the moderating effect of audit quality. Design/methodology/approach This study used secondary data from the listed companies in Amman Stock Exchange (2009–2020). To obtain additional robust findings, this study used various proxies for measuring tax avoidance (effective tax rate [ETR] and cash flow effective tax rate [CFETR]). Findings Relying on various proxies for tax avoidance, the results reveal that family and managerial ownership lead to exacerbating tax avoidance activities. Although institutional and board ownership have a positive impact on ETR and CFETR, which indicate that these type of ownership have a negative impact on tax avoidance. Audit quality also has a significant role in moderating the ownership structure–tax avoidance relationships. Besides, the results reveal that audit firm size is not merely symbolic words, but it contributes to reducing and restricting tax aggressiveness. Research limitations/implications This study has policy implications related to the policymakers in creating future tax policies to minimize and avoid tax avoidance activities. Results of this study can be used to improve awareness among the various owners and to reduce the tax avoidance practices in the developing countries. It also determines a good agenda for research in the relationships between ownership identities, audit quality and tax avoidance, which also can be used to encourage and guide future studies. Originality/value This research extends the existing literature by examining both the direct and indirect influence of ownership structure on tax avoidance in Jordanian firms by including audit quality as a moderating variable. This is a pioneering and unique study examining the joint influence of the different forms of ownership on tax avoidance. To the best of the author’s knowledge, this study is the first of its kind that examines the interaction influences between the various identities of ownership and audit quality on the tax avoidance activities in the Jordanian context.

Governance mechanisms, firm performance and CEO compensation: evidence from Jordan

Purpose This paper aims to investigate the effect of governance mechanisms and firm performance on chief executive officer (CEO) compensation in relation to the Jordanian business environment. This study also examines the moderating role of gender diversity. Design/methodology/approach The sample is drawn from the annual reports of 68 Jordanian firms between 2015 and 2019. This paper uses the ordinary least square regression. It also uses the generalised method of moments approach to control any endogeneity issue and analyses the data in depth. In addition, it uses a dynamic model to address concerns regarding causality in the study’s models. Findings The results show that governance mechanisms and firm performance have an impact on CEO compensation. Furthermore, the outcomes indicate that gender diversity significantly and positively moderates the association between firm performance and CEO compensation. These findings enhance and support agency theory in the context of Jordan. Practical implications The study’s results have significant implications for policymakers, shareholders, investors, academicians and the public in the developing Jordanian market. The findings also support more monitoring and inspection to prevent the occurrence of opportunistic management behaviour and ensure that CEO remuneration packages are appropriately designed. Originality/value This study provides a unique understanding by explaining the impact of governance and performance on CEO compensation in a developing country such as Jordan. Besides that, the current study extends prior studies in Jordan significantly.

The Impact of CEO Turnover on Financial Performance of Industrial Firms Listed on the Amman Stock Exchange

The present study endeavors to examine the correlation between CEO turnover and the financial performance of industrial firms in Jordan. The primary objective of this research is to assess how changes in the Chief Executive Officer (CEO) position affect the financial performance of an organization. This investigation encompasses three specific aspects by analyzing the timing of CEO turnover events in relation to key financial performance (FP) indicators, namely Return on Assets (ROA) and Return on Equity (ROE). Utilizing financial data collected from 33 firms between 2017 and 2021, a panel data regression analysis was conducted to reach meaningful conclusions. The results indicate a negative relationship between CEO turnover and FP, regardless of the timing of CEO dismissal, which highlights the low tolerance for poor performance in industrial firms in Jordan. Furthermore, the study found that ROE serves as a more accurate predictor of CEO turnover compared to ROA. Based on these findings, the study formulates several conclusions and recommendations, as well as potential directions for future research.

The board gender composition and cost of debt: Empirical evidence from Jordan

AbstractThe present research aims to examine the influences of board gender composition on debt costs and its significance to Jordanian creditors: mainly banks, using agency and resource dependence theories. A sample of 113 non‐financial Jordanian firms listed on the Amman Stock Exchange (ASE) from 2010 to 2019 was utilised to explore the impact of board gender on the cost of debt financing through panel regression analysis. To tackle endogeneity concerns, we employ a two‐step system generalised method of moments estimator. The findings discovered that more female directors on firm boards generated economic benefits for non‐financial sectors, which achieved an average 0.75% cut‐off interest rate incurred by lenders compared to the counterparts with fewer female directors. Our findings are still robust to endogeneity concerns. The findings offered valuable insights for academics, shareholders, firms, and regulators. Shareholders are required to provide more pressure on firms to enhance gender equality. Firms should adjust board gender composition via the inclusion of more female directors while regulators should develop guidelines, such as a minimum female quota in promoting more females to the board. The finding generalisability is limited to developing markets with similar settings. This study bridged a vital gap in the governance literature on the nexus between board gender composition and debt costs in Jordanian contexts where no minimum gender quota exists.

Nexus between Intellectual Capital and Financial Performance Sustainability: Evidence from Listed Jordanian Firms

Nexus between Intellectual Capital and Financial Performance Sustainability: Evidence from Listed Jordanian Firms

How did COVID‐19 lockdowns affect firms and workers? Evidence from Jordan and Morocco

AbstractMotivationThe COVID‐19 pandemic harmed business and employment in two ways: ill health reduced consumer demand for goods and services; and lockdowns to control disease prevented businesses from operating. This article is concerned with the latter effect.PurposeThis article assesses the losses of full‐time and part‐time jobs as well as wage cuts in Jordan and Morocco as a result of businesses having to close down under lockdowns.Methods and approachWe compared firms that closed down under lockdown to those that did not in the two countries. We used propensity score matching to balance the two sets of firms.We drew on data from two rounds of the COVID‐19 World Bank Enterprise Survey, carried out in June–August 2020 for both countries; and November–December 2020 for Jordan and January–February 2021 for Morocco. The surveys included 601 firms in Jordan and 1,096 in Morocco. We used results from the first round to estimate short‐term effects, and those from the second round to estimate medium‐term effects.The survey differentiated firms by sector—manufacturing, retailing, and other services—by firm size, by whether they were under foreign ownership, and by whether they were engaged in exporting.FindingsFirst we checked the likelihood that firms closed: larger firms and non‐exporting firms were significantly less likely than smaller and exporting firms to close down.When firms closed, they shed jobs, but with marked differences across sectors.Manufacturing firms laid workers off in the short term, an effect that did not increase in the medium term. However, manufacturing firms did reduce wages in the medium term.Retail firms shed fewer jobs in the short term but cut more jobs in the medium term—mainly of part‐time workers. They also cut wages in the medium term.For other services, job losses were observed for part‐time workers in both the short term and the medium term.Policy implicationsPolicy‐makers should consider promoting digitization of the economy; programmes to reform and repurpose businesses; and targeted unemployment benefits to protect workers from loss of jobs and earnings from lockdowns.

Factors affecting organizational intention to adopt forensic accounting practices: A case of Jordan

Lack of effective internal control, subpar financial reporting, and inefficient audits have all harmed an organization’s ability to operate efficiently. Organizations are now under pressure to enhance their auditing procedures in order to stop and catch fraud. Forensic accounting techniques have gained attention in this direction as a fraud identification and prevention tool. This study aims to examine the factors that affect an organization’s intention to adopt forensic accounting practices. The analysis is based on primary data and uses a sample of 273 employees from listed firms in Jordan to examine this phenomenon. Specifically, the study used correlation and regression analysis to investigate whether coercive, mimetic, and normative pressures determine organizations’ intentions to use forensic accounting practices. The results confirm a significant positive relationship between coercive, mimetic, and normative pressure and the organizations’ intentions to use forensic accounting practices among Jordanian firms. These results highlight the importance of management consultants and training of the employees for appropriate fraud risk management.

THE EFFECT OF WORKING CAPITAL EFFICIENCY ON EARNING MANAGEMENT IN JORDANIAN INDUSTRIAL COMPANIES LISTED ON THE AMMAN STOCK EXCHANGE

This study aimed to find out the effect of working capital efficiency on earning management in Jordan. The study relied on the descriptive analytical approach. Where the study population consists of all Jordanian industrial companies listed on the Amman Stock Exchange for the period 2013-2022, which are 33 listed companies, and the collected data were analyzed through the STATA program. The results indicate that there is a significant effect between the working capital efficiency (Average Receivable Collection Period, Average Payable Period, Average Inventory Holding Period, Average Cash Cycle Period, Net Trading Cycle) on the earnings management of industrial companies listed on the Amman stock exchange. The findings of the study contribute to the literature on working capital management and earnings management and have important implications for the financial performance of firms in Jordan. Overall, working capital management is a crucial aspect of financial management for manufacturing firms in Jordan. Effective working capital management can help firms maintain their operations, manage their cash flow, and improve their financial performance, while also contributing to the development of the manufacturing sector and the economy as a whole.

The Impact of Employees Empowerment on Workplace Creativity in Interior Design Companies in Jordan

Objective: Examining how employee empowerment affects workplace creativity within SME employees of interior design firms in Jordan’s capital city of Amman. Method: Primary information gathered from a broad sample of SME workforce via online questionnaire. For analysis, 80% of the entire number of distributed surveys were deemed legitimate. Software for social sciences and humanities (SPSS). Results: Workers in Jordanian SMEs are highly empowered in terms of Job significant, Job competence, and Self-determination. The three factors have a considerable positive association, and employee empowerment has a favorable impact on workplace creativity. There is evidence to support the sub-hypotheses on the importance of the Job significant, Job competence, and Self-determination. Recommended Actions: Provide financial and moral support, recognize and encourage employees who have new ideas, and provide them the tools they need to succeed through training, responsibility delegation, and participation in decision-making. Meaning: The study emphasizes the value of employee empowerment in fostering workplace creativity and innovation in SMEs, which confront particular challenges due to scarce resources, competition, and market changes.

The Impact of Demographic Variables of Audit Committee on Earning Management in Listed Companies in Amman Stock Exchange

Purpose: The purpose of this study is to inspect the influence of demographic variables of the AC on EM in listed companies on the ASE. Specifically, the study aims to examine the effect of AC size, independence, expertise, and diversity on EM practices in Jordanian firms. Theoretical framework: The influence of demographic variables of the AC on EM is an important topic that has been studied by a significant number of researchers, as well as those who are interested in the accounting profession. This subject has gotten a lot of attention from academics, professionals, and other interested parties in recent years (Al-Thuneibat, Alsmadi, and Alsharairi (2017); Al-Khadash (2016); Srouji and Khamees (2021) and Al-Rawashdeh and Al Khattab (2020). Findings: In this study, demographic variables of the AC, such as gender diversity, age, education, and experience, are expected to affect the effectiveness of the committee in fulfilling its monitoring and control functions or its supportive functions. For instance, a more diverse AC may bring different perspectives and enhance the quality of decision-making, whereas an experienced committee may have a better understanding of the company's operations and risks. Research, practical & social implications: The study population comprised of all Jordanian industrial firms listed on the ASE for 5 years, from 2017 to 2021. Moreover, 55 industrial firms were included in the analyses. Analyses was used to analyze the panel data which was collected from the annual report were used to analyze the panel data. Originality/Value: The fact, our current study is the first to inspect the influence of demographic variables of the AC on EM in listed companies on the ASE. Specifically, the study aims to examine the effect of AC size, independence, expertise, and diversity on EM practices in Jordanian firms.

Does capital structure matter? Evidence from family-owned firms in Jordan

PurposeThis study examines the potential impact of capital structure on the financial performance of family-owned firms in Jordan.Design/methodology/approachUsing panel data of 107 listed companies from 2019 to 2021, the authors use a multivariate regression model to empirically examine the role that family firms' capital structure can play in engendering financial performance in the short and long terms.FindingsThis study's evidence indicates that family businesses rely on equity as their primary source of funding. This approach has been proven to be detrimental to their financial performance, as evidenced by the negative impact of capital structure on family firms' financial performance in the current study.Originality/valueCapital structure-related decisions are essential to a firm's performance. Thus, there have been numerous empirical studies examining the relationship between capital structure and corporate performance in various settings worldwide. However, the findings of these studies are inconclusive. Also, there are relatively few empirical studies investigating the association between capital structure and the performance of family firms in emerging countries, particularly Jordan. This study, therefore, addresses this empirical gap in extant literature.

The effect of human capital and structural capital on leverage: Evidence from Jordan

This study investigates the effect of human capital and structural capital on leverage for Jordanian industrial firms from 2006 to 2020. The relevance of this topic lies in the importance of capital structure decisions for firm value and the limited research conducted on the topic in Jordan. The aim is to examine whether human capital efficiency and structural capital efficiency significantly affect leverage. The sample includes 77 industrial firms. The study employs multiple regression analysis to test the hypotheses, controlling for variables such as return on equity and firm size. The findings show that structural capital efficiency does not significantly affect leverage, but human capital efficiency and ROE have significant effects. Furthermore, the study finds that the relationship between these variables differs between large and small companies. This implies that firms with more efficient human capital tend to use less debt financing. The study concludes that human and structural capital efficiency should be considered when making capital structure decisions, as they can affect the optimal level of debt financing. The practical value is the insights for firms in Jordan and other emerging markets on optimizing their capital structure decisions by considering their human and structural capital efficiency. These results contribute to the literature on firm performance determinants in emerging economies and offer valuable information for practitioners and policymakers. AcknowledgmentI want to thank Amman Arab University for funding this study.

Cash flow volatility and leverage: Evidence from non-financial Jordanian companies

This study investigates the relationship between cash flow volatility and leverage in Jordanian firms. The research purpose is to investigate whether cash flow volatility affects a company’s capital structure in Jordan. Panel data analysis is used in this study for a sample of 72 shareholder non-financial companies in Jordan from 2009 to 2020. The findings show that cash flow volatility has a significant link with leverage, indicating that companies with higher cash flow volatility tend to use more debt financing. In addition, the study finds that firm size, return on assets, and tangibility are positively associated with leverage, while growth is not significantly related. The study suggests that firms in Jordan should take cash flow volatility in consideration when making capital structure decisions. The study provides evidence that cash flow volatility is a vital determinant of leverage in Jordanian companies. The findings suggest that managers should consider the cash flow volatility effect on the capital structure alternatives of their firms. AcknowledgmentI want to thank Amman Arab University for its support.

The Moderating Role of Big Data and User Satisfaction in the Predictors of Generalized Audit Software among Jordanian Auditing Firms

Generalized Audit Software (GAS) is critical for auditing a firm’s financial statements. However, the usage of this software is widely limited to developed countries. The purpose of this study is to examine the usage of GAS among auditing firms in Jordan. Based on the technology organization environment framework (TOE), our study proposes organizational factors (technology cost benefits analysis (TCBA), technological compatibility (TC) (technological factors (TF), top management support (TMS), organizational readiness (OR), environmental factors (GAS complexity (GASC), and competitive pressure (CP)) to affect the GAS usage (GASU). Furthermore, auditor satisfaction was proposed as a moderating variable. Moreover, the data was collected from auditors using convenience sampling and analyzed using Smart PLS. The findings showed that TCBA, TC, TMS, OR, and GASC are critical predictors of GASU. Additionally, CP has an insignificant effect on GASU. Also, auditor satisfaction is not a moderating variable while big data moderated the effect of Technological factors on GAS. Lastly, more studies are needed in GASU in developing countries to understand the predictors of this technology among individuals. This means that decision-makers are advised to enhance the knowledge of auditors regarding the usage of GAS and to spread the knowledge regarding the benefits of GAS for auditors and auditing firms.

Application of Using the Activity-Based Costing System on Product Development in Jordan’s Manufacturing Listed Manufacturing Firms

Purpose: The aim of this research was to examine how the Activity-Based Costing system (ABC) affected product development in Jordanian manufacturing public shareholding companies. Design/methodology/approach: According to the monthly statistical bulletin of the Amman Stock Exchange and the Securities Depository Center, the study population for the year 2022 included (56) Jordanian industrial firms. The questionnaire was distributed to the financial manager, production manager, sales manager, and accountant. In comparison to the total number of circulated questionnaires, (132) were authorized for statistical analysis. Regression analysis and correlation were used to analyze the data and extract results related to the statistical methods used in the study, namely, descriptive statistics, Cronbach's alpha equation, Pearson's correlation coefficient, and linear regression analysis. Findings: The study revealed that there is a connection between the ABC system and product development in Jordanian industrial companies, where this approach contributes to the improvement and development of products by tracking the stages of production since its inception and concentrating on activities that add value to the company and eliminating activities that do not add any value, naturally improving the competitive position of the company. Research Practical implications: Hence, one of this study's main findings suggests developing strategies for methodically and practically gathering comprehensive data on the company's operations. The study advised that Jordan's industrial public shareholding companies stay up with recent advancements in the field of activity-based costing. Originality/value: This study recommends that for the company to stay up with the acceleration in advancement in the areas of activity costs and the employment of latent capabilities for the company's advantage, the study also recommended that the company train its employees to develop their capabilities to serve its strategies. As the findings also reveal that most of the manufacturing firms in Jordan have the infrastructure to adopt and implement the ABC system.