The aim of this paper is to examine the optimal board size in the Jordanian banking sector with a focus on the accounting performance using a panel data from 2004 to 2013. In general, we find that the board size and bank performance are related but not at a significant level. Interestingly, we find that neither too small boards nor too large boards are effectively enhancing the bank accounting performance. The study concludes that the optimal board size is between 9 to 12 directors. Boards with less than nine directors are found to be insignificantly related to the bank performance while boards with more than 12 members are significantly and negatively related to the performance. Currently, the corporate governance codes suggest the board to be at least five directors and not more than 13 directors. Thus, this study suggests the policy makers to limit the size of the board to 9-12 directors only.
The main objective of this study is to examine the relationship between government ownership and bank performance in Jordan. The banking sector has been widely ignored in the past corporate governance studies due to its strict system. Using a panel data from 2004 to 2013 (147 observations/years), the multiple regression analysis shows that increasing the percentage of shareholdings leads to higher profitability. Additional government-linked banks (GLBs) generally outperform their unlinked counterparts. However, their outperformance is contingent to the significance percentage of the shareholdings. On other words, if the government shareholdings are not significant (less than 10%) the government ownership does not make a significant difference in the performance. Using panel data provide us with a significant roles played by the period of the study. The banks show increasing in their performance through the period of this study. However, the size and the age of the banks are found to be insignificant while the leveraged banks significantly underperform their counterparts. The results of this study might be of interest of potential investors, policy makers, governance agencies and information users.
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