International Journal of Accounting, Finance and Risk Management

| Peer-Reviewed |

The Relationship Between Board Size and CEO Duality and Firm Performance: Evidence from Jordan

Received: Sep. 16, 2018    Accepted: Oct. 12, 2018    Published: Nov. 07, 2018
Views:       Downloads:

Share This Article

Abstract

This study investigates the relationship between board of directors’ characteristics namely (board size and CEO duality) and firm performance among Jordanian listed firms. Firm performance is measured using return on assets (ROA). Due to limited studies regarding corporate governance practices and firm performance has been done in developing countries like Jordan. Importantly, these studies have also been limited in their scope due to restricted and particularized focus on factors hindering firm performance in the industrial sector of Jordan. This study covers industrial listed firms on the Amman Stock Exchange, Jordan for the year 2013 as a sample. Multiple regression analysis is used to test the hypotheses and to examine the relationship between board of directors’ characteristics namely (board size and CEO duality) and firm performance. The findings showed that board size is significantly and positively related to ROA. On the other hand, CEO duality is significantly and negatively related to ROA. These results indicate that corporate governance plays a vital role in enhancing firm performance and reducing agency conflict. Further, regulator bodies in Jordan should increase the effectiveness of corporate governance in industrial Jordanian firms in order to enhance the quality of financial reports. In addition, this study opens up avenues for more studies on firm performance not only in Jordan, but also in other countries where this area of study is lacking.

DOI 10.11648/j.ijafrm.20180303.11
Published in International Journal of Accounting, Finance and Risk Management ( Volume 3, Issue 3, September 2018 )
Page(s) 16-20
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Corporate Governance, Board of Directors Size, CEO Duality, Firm Financial Performance

References
[1] Alkhatib, K., & Eqab Al Bzour, A. (2011). Predicting corporate bankruptcy of Jordanianlisted companies: Using Altman and Kida models. International Journal of Business and Management, 6(3), p 208.
[2] Abdullatif, M., & Al-Khadash, H. A. (2010). Putting audit approaches in context: the case of business risk audits in Jordan. International Journal of Auditing, 14(1), 1-24.
[3] Ajeela E., & Hamdan A. (2011). The relationship between corporate governance and earnings management: Evidence from Jordan. Arab Journal of Administrative Sciences, 17(2), 1-28.
[4] Jensen, M., & Meckling, W. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Financial Economics, 3(4), 305-360.
[5] Kyereboah-Coleman, A., & Biekpe, N. (2005). The relationship between board size, board composition CEO duality and firm performance experience from Ghana. Working paper.
[6] Dalton, C. & Dalton, D. (2005). Boards of directors: Utilizing empirical evidence in developing practical prescriptions. British Journal of management, 16(1), 91-97.
[7] Jensen, M. (1993). Modem industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 3(4), 831-80.
[8] Salihi, A. A. (2015). The effect of board the size and audit committee the size on earnings management in Nigerian consumer industries companies. International Journal of Innovative Research and Development|| ISSN 2278–0211, 4(3).
[9] Nath, S. D., Islam, S., & Saha, A. K. (2015). Corporate Board Structure and Firm Performance: The Context of Pharmaceutical Industry in Bangladesh. International Journal of Economics and Finance, 7(7), 106.
[10] Gill, A., & Mathur, N. (2011).Board size, CEO duality, and the value of Canadian Manufacturing firms. Journal of Applied Finance and Banking, 1(3), 1-13.
[11] Kouki, M., & Guizani, M. (2015). Outside directors and firm performance: The moderating effects of ownership and board leadership structure. International Business Research, 8(6), 104.
[12] Conyon, M. J. (2014). Executive compensation and board governance in US firms. The Economic Journal, 24(574), F60-F89.
[13] Kumar, N., & Singh, J. P. (2013). Effect of board size and promoter ownership on firm value: some empirical findings from India. Corporate Governance: The international journal of business in society, 13(1), 88-98.
[14] Yusoff, W. F. W., &Alhaji, I. A. (2012). Corporate governance and firm performance of listed companies in Malaysia. rends and Development in Management Studies, (1), 43-65.
[15] Liao, L. K. C., Mukherjee, T., & Wang, W. (2015). Corporate governance and capital structure dynamics: An empirical study. Journal of Financial Research, 38(2), 169-192.
[16] Kalsie, D., & Mittal Shrivastav, S. (2016). The Relationship between CEO Duality and Firm Performance: An Analysis Using Panel Data Approach.
[17] Jackling, B., & Johl. S. (2009). Board Structure and Firm Performance: Evidence from India’s Top Companies. Journal of Corporate Governance: An International Review, 17(4): 492-509.
[18] Ujunwa, A., Salami, P. O., & Umar, A. H. (2013, January). CEO Duality and Firm Performance: An Integration of Institutional Perceptive with Agency Theory. In Proceedings of World Academy of Science, Engineering and Technology (No. 73, p. 860). World Academy of Science, Engineering and Technology (WASET).
[19] Fooladi, M. (2012) Board characteristics and firm performance, Journal of Modern Accounting and Auditing, 8(5):688-694.
[20] Fauzi, F., & Locke, S. (2012). Board structure, ownership structure and firm performance: A study of New Zealand listed-firms.
[21] Nodeh, F. M., Anuar, M. A., Ramakrishnan, S., & Raftnia, A. A. (2016). The Effect of Board Structure on Banks Financial Performance by Moderating Firm Size. Mediterranean Journal of Social Sciences, 7(1), 258.
[22] Schmid, M., Zimmerman, H. (2007), Should chairman and CEO be separated? leadership structure and firm perform Switzerland. Working paper, from http://papers.ssrn.com/sol3/papers.cfmabstract_id=696381.
[23] Saeed, M. B., Murtaza, Z., & Sohail, I. (2013). Corporate Governance and Firm Performance: A Study on Moderating Effects of Firm Size and Leverage on the Relationship between Corporate Governance and Firm Performance in Banking Sector of Pakistan.
Cite This Article
  • APA Style

    Almontaser Abdallah Mohammad Qadorah, Faudziah Hanim Bt Fadzil. (2018). The Relationship Between Board Size and CEO Duality and Firm Performance: Evidence from Jordan. International Journal of Accounting, Finance and Risk Management, 3(3), 16-20. https://doi.org/10.11648/j.ijafrm.20180303.11

    Copy | Download

    ACS Style

    Almontaser Abdallah Mohammad Qadorah; Faudziah Hanim Bt Fadzil. The Relationship Between Board Size and CEO Duality and Firm Performance: Evidence from Jordan. Int. J. Account. Finance Risk Manag. 2018, 3(3), 16-20. doi: 10.11648/j.ijafrm.20180303.11

    Copy | Download

    AMA Style

    Almontaser Abdallah Mohammad Qadorah, Faudziah Hanim Bt Fadzil. The Relationship Between Board Size and CEO Duality and Firm Performance: Evidence from Jordan. Int J Account Finance Risk Manag. 2018;3(3):16-20. doi: 10.11648/j.ijafrm.20180303.11

    Copy | Download

  • @article{10.11648/j.ijafrm.20180303.11,
      author = {Almontaser Abdallah Mohammad Qadorah and Faudziah Hanim Bt Fadzil},
      title = {The Relationship Between Board Size and CEO Duality and Firm Performance: Evidence from Jordan},
      journal = {International Journal of Accounting, Finance and Risk Management},
      volume = {3},
      number = {3},
      pages = {16-20},
      doi = {10.11648/j.ijafrm.20180303.11},
      url = {https://doi.org/10.11648/j.ijafrm.20180303.11},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijafrm.20180303.11},
      abstract = {This study investigates the relationship between board of directors’ characteristics namely (board size and CEO duality) and firm performance among Jordanian listed firms. Firm performance is measured using return on assets (ROA). Due to limited studies regarding corporate governance practices and firm performance has been done in developing countries like Jordan. Importantly, these studies have also been limited in their scope due to restricted and particularized focus on factors hindering firm performance in the industrial sector of Jordan. This study covers industrial listed firms on the Amman Stock Exchange, Jordan for the year 2013 as a sample. Multiple regression analysis is used to test the hypotheses and to examine the relationship between board of directors’ characteristics namely (board size and CEO duality) and firm performance. The findings showed that board size is significantly and positively related to ROA. On the other hand, CEO duality is significantly and negatively related to ROA. These results indicate that corporate governance plays a vital role in enhancing firm performance and reducing agency conflict. Further, regulator bodies in Jordan should increase the effectiveness of corporate governance in industrial Jordanian firms in order to enhance the quality of financial reports. In addition, this study opens up avenues for more studies on firm performance not only in Jordan, but also in other countries where this area of study is lacking.},
     year = {2018}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - The Relationship Between Board Size and CEO Duality and Firm Performance: Evidence from Jordan
    AU  - Almontaser Abdallah Mohammad Qadorah
    AU  - Faudziah Hanim Bt Fadzil
    Y1  - 2018/11/07
    PY  - 2018
    N1  - https://doi.org/10.11648/j.ijafrm.20180303.11
    DO  - 10.11648/j.ijafrm.20180303.11
    T2  - International Journal of Accounting, Finance and Risk Management
    JF  - International Journal of Accounting, Finance and Risk Management
    JO  - International Journal of Accounting, Finance and Risk Management
    SP  - 16
    EP  - 20
    PB  - Science Publishing Group
    SN  - 2578-9376
    UR  - https://doi.org/10.11648/j.ijafrm.20180303.11
    AB  - This study investigates the relationship between board of directors’ characteristics namely (board size and CEO duality) and firm performance among Jordanian listed firms. Firm performance is measured using return on assets (ROA). Due to limited studies regarding corporate governance practices and firm performance has been done in developing countries like Jordan. Importantly, these studies have also been limited in their scope due to restricted and particularized focus on factors hindering firm performance in the industrial sector of Jordan. This study covers industrial listed firms on the Amman Stock Exchange, Jordan for the year 2013 as a sample. Multiple regression analysis is used to test the hypotheses and to examine the relationship between board of directors’ characteristics namely (board size and CEO duality) and firm performance. The findings showed that board size is significantly and positively related to ROA. On the other hand, CEO duality is significantly and negatively related to ROA. These results indicate that corporate governance plays a vital role in enhancing firm performance and reducing agency conflict. Further, regulator bodies in Jordan should increase the effectiveness of corporate governance in industrial Jordanian firms in order to enhance the quality of financial reports. In addition, this study opens up avenues for more studies on firm performance not only in Jordan, but also in other countries where this area of study is lacking.
    VL  - 3
    IS  - 3
    ER  - 

    Copy | Download

Author Information
  • Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Sintok, Malaysia

  • Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Sintok, Malaysia

  • Section