Ownership Concentration, Board Characteristics and Performance: Evidence from Jordan

Abstract

In this paper, we examine the effects of ownership concentration and board characteristics on the performance of listed firms domiciled in Jordan, one of the main emerging markets in the Middle East. Employing 2SLS regressions on a sample of 103 firms listed on the Amman Stock Exchange for financial years 2002-05, the empirical results suggest that ownership concentration, multiple directorships and board size are each positive and significant in determining firm performance. Although our results contradict the findings of some developed market studies, they are broadly consistent with recent evidence from emerging markets. Hence, it supports our argument and echoes some of prior researchers’ contention that the reforms of corporate governance principles in emerging markets must go beyond adopting the best practice in developed markets and take into account the country and firm-specific characteristics.

Keywords: Ownership Concentration, Board Characteristics, Emerging Markets, Jordan, Performance

JEL Classification: G34, K22