Corporate governance and risk taking of Jordanian listed corporations: the impact of board of directors

Abstract

The aim of this study is to evaluate the compliance level of corporate governance rules and examine the impact of this compliance on risk taking of corporations in Jordan. This study used panel data of the listed corporations in Amman Stock Exchange from 2013 to 2017. Corporate governance index was constructed to gauge the compliance level of corporate governance rules. The results show a good level of overall compliance of corporate governance rules. As for the compliance of the categories of corporate governance rules, rules of transparency and disclosure are ranked first, while rules of general meeting assembly are ranked fourth. The regression results report a negative influence of corporate governance and corporate risk taking. In addition, four governance variables concerning the features of the board of directors are used in the study. The results reveal a negative impact of the size of the board of directors, independence of the board, and committees of the board on corporate risk taking. It is expected that the outcomes of the study can be used by management of the corporations in addition to the Jordanian Securities Commission that seek to enhance confidence in the Jordanian capital market.

Sustainable development through the effect of board diversity and CEO duality on corporate risk: Does the state‐owned enterprises matter?

“…Regulating bodies such as the UK Corporate Governance Code (formerly known as the Code, 2003) believe that powerful CEOs can act in their own interest. Holding the position of CEO and board chairperson at the same time provides the CEO with over-reliance, which has a negative impact on such individual's capacity to make the right investment decisions and, therefore, leads the firm toward greater risk-taking (Al-Smadi, 2019). Agency theory also supports that CEO duality could hinder boards' ability to monitor management strategies and plans (Hermalin & Weisbach, 2003).…”

The Influence of Audit Committee Characteristics on Modified Audit Opinion in Jordan

“…[32] report a positive relationship between AC financial expertise and the quality of short-term disclosure. Comparison, [26] do not find a significant relationship between AC financial expertise and the quality of voluntary disclosure in Jordan. Financial expertise is considered fundamental to an AC's effectiveness because the committee needs to conduct several responsibilities that require a high level of financial/accounting complexity [30,32].…”

“…The configuration of AC is less strict in Jordan compared to developed nations [26,27]. Furthermore, in 2004, instituting ACs became obligatory for corporates listed in the Jordan Securities Commission (JSC).…”

Slack resources and firm performance: evidence from GCC countries

“…Second, the paper also contributes to agency theory (Jensen, 1986) by examining the principal–agent problems that may arise from holding liquid resources in the GCC. Finally, this paper extends our knowledge of how the institutional environment, particularly in emerging economies, may influence the quality of a firm’s cash management practices (Al-Amri et al , 2015).…”

“…The prevalence of oil production in the GCC market enabled many firms to accumulate and allocate their liquid resources to value-generating opportunities (Elbanna et al , 2020). Further, the GCC provides an important context in terms of institutional development and governance practices (Al-Malkawi et al , 2014), which influences how decision-makers allocate the firm’s slack resources in these emerging markets (Al-Amri et al , 2015; Malen and Vaaler, 2017). To examine this relationship, we first unpacked slack resources to available, recoverable and potential slack (Daniel et al , 2004; Titus et al , 2022), and then proceed to investigate their separate effects on a firm’s financial performance in the GCC economies.…”