The mediating effect of the managerial ownership towards the influence of the board of directors on the firm performance among jordanian public shareholders companies.html

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 760-767

J. Environ. Treat. Tech.

ISSN: 2309-1185

Journal weblink: http://www.jett.dormaj.com

The Mediating Effect of the Managerial

Ownership towards the Influence of the Board

of Directors on the Firm Performance among

Jordanian Public Shareholders Companies

Mohammad Mustafa Dakhlallh , Nik Mohd Norfadzilah Nik Mohd Rashid *, Wan

Amalina Wan Abdullah , AbedAlrahman Mustafa Dakhlallh

¹Faculty of Economics and Management Sciences, Universiti Sultan Zainal Abidin, 21300 Kuala Nerus, Terengganu,

Malaysia

Faculty of Management, Al-Hussein Bin Talal University, Jordan

Received: 15/06/2019

Accepted: 12/08/2019

Published: 01/12/2019

Abstract

Prior studies that dealt with corporate governance mechanisms have witnessed high significant that created some new

trends. This study aims to be engaged in such trends through investigating the relationship between the board of directors as

one of the corporate governance mechanisms and firm performance with the presence of managerial ownership as a mediating

variable in Jordan as one of developing countries. This study used the panel data method to analyze data for a sample of 180

companies listed on the Amman Stock Exchange (ASE) for the period from 2009 to 2017. Three board of directors dimensions

are employed, which are: board size, board independence, and CEO duality, and mediating variable is managerial ownership.

The current study used Tobin’s Q to assess firm performance. Meanwhile, the current study provides evidence that the

mediating of managerial ownership has a significant negatively on the association between mechanisms of the board of

directors, which are board size, board independence, and CEO duality with firm performance measured by (TQ). The findings

of this study confirm empirical research continuing to find a new performance measurement to gain a real form of firm

performance. Therefore, the evidence of this study provides empirical evidence to stakeholders, managers and interested

parties to support them for its decision.

Keyword: Corporate Governance, Board of Directors, Firm’s performance, Managerial Ownership.

Introduction¹

Concerns about corporate governance in many

directors is more important internal corporate governance

structure in a company.

The Board of directors is responsible for maintaining

the assets to facilitate the completion of the administrative

work and contribute to the achievement of high efficiency,

which leads to ensure that the objectives have been

achieved in accordance with the policies established.

Where the investor needs to the analysis of the values and

indicators of market shares, and the most important that's

values is the rate of return on those investments, where

returns are a good measure on the performance of the

boards of directors.

Thus, it appears as straightforward that identifying

and analyzing those determinants that influence financial

performance is of great relevance. While on one hand it is

logical to suppose that the managerial abilities of the board

of directors would have a significant impact on the entity’s

financial performance, on the other hand it is not clear-cut

whether certain board characteristics regarding its

remuneration would significantly influence the

company’s performance (5).

emerging markets emerged as a result of a series of recent

corporate accounting scandals across the United States,

Europe and East Asian (1). Where several interested

parties around the world tried to face such problems

through according on corporate governance as a robust

system to participate in solving its (2).

The governance structure is mainly tasked with the

process of distribution of rights and responsibilities

among different participants in the corporation such as;

the board of directors, stakeholders, manager, creditors,

auditors and regulators (3). Thus, the mechanisms of the

board of directors are one of the constituent mechanisms

of corporate governance. Where the boards of directors

participate a fundamental role in corporate governance,

the structure of the strategic dimensions of the company

and originate goals (4). Therefore, corporate governance

depend much on internal structures more than external

ones for enhancing the firm value. So, the board of

Corresponding author: Mohammad Mustafa Dakhlallh, Faculty of Economics and Management Sciences, Universiti Sultan Zainal Abidin,

1300 Kuala Nerus, Terengganu, Malaysia, E-mail: Mohammad_Dakhlallh@yahoo.com.

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2019, Volume 7, Issue 3, Pages: 760-767

Corporate governance now has become a norm in

Jordan, where Amman Stock Exchange (ASE) has made

several changes through issuing a corporate governance

mechanism in 2009 (6). Revealed by The World Bank

2.1 Board size and firm performance

Board size is an important dimension of the board’s

structure, and there is a need to ensure it is a good fit for

the responsibilities, needs, and objectives of the

organization it serves (17). Agency theory suggests that a

board comprising a larger number of directors is more

likely to act as a better monitor of the firm’s executive

management, since having a greater number of directors

involved in management activities will make the board

more vigilant (18). As the resource dependence theory

suggests that larger board size would lead to better

corporate performance, because of the different skills,

knowledge, and expertise (19). The results of such studies

show that the larger the board leads to having expertise,

knowledge, and effectiveness; thus this will lead to better

performance (20). Coles et al., (12) used a sample of 8165

firm-year observations to study the relationship between

board size and firm performance, they have found that

board size is positively linked with a high TQ ratio.

Yasser, Entebang, & Mansor (21) found also that the size

of the board positively affects the performance measured

ROE & PM. The study Alabede (22), also found board

size to be significantly positively correlated with

operating performance. More specifically, in Jordanian

non-financial sector, a study was done by Alabdullah,

Yahya, Nor, & Majeed (23), demonstrates that there is a

positive relationship between board size and firm

performance. Thus, the results tell us that a larger board

size helps to improve firms’ overall value. This can be

explained by the fact that a large board size would mean

more − and arguably better − views and decision-making

following debates on the strategic decisions faced by a

company in times of difficulty or at times of expansion

(

2014) that non-financial sector represented by service

and industrial companies faced a drop in Gross Domestic

Product (GDP) in the last few years. However, due to the

poor performance in those sectors, Jordan has faced

several internal economic, business and social challenges

besides the global financial crisis, which call for the

importance of identifying key factors influencing the

firm’s performance (2). Therefore, so far Jordanian

companies have not yet reached the phase of full

compliance with the corporate governance code (7). Thus,

in 2017, Amman Stock Exchange (ASE) has made modify

of corporate governance code, through the “compliance or

penalties” approach rather than the “compliance or

explain” approach.

Based on the above explanation, the contribution of

the current study lies in selecting all sectors constituent of

Jordanian companies (financial, service, industrial sector)

excepted banks sector. Thus, the current study aims to

examine the impact of the indirect relationship of the

mediate of managerial ownership on the relation between

the board of directors and firm performance in one of the

emerging markets namely Jordan. Furthermore, the

significant role made by the current study is considered as

an attempt to fill a gap in the previous studies by exploring

the relationship between the most important mechanisms

of corporate governance (board of directors) with market-

based measurement (Tobin's Q).

Literature Review and Research

(

18).

On the other hand, Lipton & Lorsch (24) asserts that

Hypotheses

In an environment without monitoring and effective

large board size is less effective compared to small boards

because there is a tendency to form cliques and core

groups, thus deteriorating overall cohesion. Kao & Chen

market regulations, managers are more likely to deviate

from protecting the shareholders’ interests (8; 9). So, the

board of directors is viewed as part of the internal

corporate governance mechanism that plays a key role in

reducing agency costs arising from the separation between

ownership and control as a perspective for an agency

theory (10; 11).

The corporate board performs two main functions in

corporate governance. Firstly, monitoring behavior of the

senior management, company performance to protect the

interest of the shareholders (12). Secondly, the board

serves as an adviser to the executive (10). By these roles,

the success or failure of a company lies with the board

(

25) have found that larger board size has the potential to

weaken its functioning, and hence its performance,

because large boards may be characterized by difficulties

in achieving efficient communication between members.

Iturralde, Maseda, & Arosa (26) similarly reported a

negative effect of board size, arguing that this may be due

to the disadvantages posed by less effective coordination,

inflexibility, and poor communication within large boards.

Al-Manaseer, Al-Hindawi, Al-Dahiyat, & Sartawi (27),

they found a negative relationship between the board size

and Jordanian banks’ performance. As researchers also

found that reasonable board size has been more effective

in controlling the firm, while a bigger board negatively

affects the firms’ performance (28). Bansal & Sharma

(

13). Hence, the quality of the board composition has great

impact on corporate performance (2). More specifically,

in Jordanian non-financial sector, a study done by (14),

demonstrates that there is a positive relationship between

the board of director and firm performance.

(

29), they found a negative and significant relationship

between board size with financial and non-financial

performance measured by ROE, ROA, Tobin's Q. In a

study conducted by Zabri, Ahmad, & Wah (30), about the

Top 100 Public Listed Companies in Malaysia, found that

board size Negatively and weak effects with performance

measured by ROA and ROE.

Company performance is very essential to

management as it is an outcome which has been achieved

by an individual or a group of individuals in an

organization related to its authority and responsibility in

achieving the goal legally, not against the law and

conforming to the moral and ethic (15). Performance is the

function of the ability of an organization to gain and

manage the resources in several different ways to develop

a competitive advantage. There are two kinds of

performance, financial performance and non-financial

performance (16).

.2 Board independence and firm performance

The positive effects of board independence on firm’s

performance have been reported by many researchers

31). From the agency perspective, independent and non-

(

executive directors reduce agency conflicts and can act as

an effective monitoring mechanism for the board (32).

However, resource dependency theory suggests that a

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Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 760-767

board with more diverse directors could have more

expertise on how to better operate the firm, thus

contributing to better firm performance (13).

Hillman (33) and Masulis, Wang, & Xie (34), they

examined the impact of the presence of outsiders on firm

value and accordingly identified a positive association

between outside board members and corporate

performance measured in terms of TQ, return on equity

checks and balances over the activities and performance

of executive directors

However, the stewardship theory argues that dual

leadership provides unparalleled firm-specific knowledge

of challenges and opportunities that a firm faces and

increases performance (36). Dual leadership structure

could also help reduce information asymmetry and may

ultimately lead to easy access to financial resources; in

turn, this can reduce the firm’s cost of capital and increase

its performance (47). Bansal & Sharma (29), they found a

positive and significant relationship between CEO duality

with financial and non-financial performance measured by

ROE, ROA, Tobin's Q.

Finally, in a study conducted by Al-Amarneh (19),

found that the duality of CEOs is not important among

Jordanian banks. Yasser et al., (21), they found a weak

significant relationship between CEO duality and ROE,

and non-significant with PM. Detthamrong et al., (40)

Detthamrong et al., (2017), they find that for an average

firm CEO duality has no effect on performance. Hence,

we can say the previous literature revealed mixed results

on the relationship between CEO duality and firm

performance.

(

ROE). As a study Al-Manaseer et al., (27) revealed a

positive relationship between the number of outside board

members Jordanian banks’ performance. Likewise,

Muniandy & Hillier (35) report that board independence

has a positive influence on firm performance in South

Africa. Bansal & Sharma (29), found a positive and

significant relationship between board independence with

financial and non-financial performance measured by

ROE, ROA, Tobin's Q. and in line with the proposition of

the Agency theory, Alabede (22) found a significant

positive relationship between the proposition of outside

directors and operating performance. This supports the

hypothesis that the independent directors are better

monitors of the board. So, inducting more independent

directors into the board improves the monitoring and

advising role of the board (36). Therefore, the relation

between board independence and firm performance

depends on the economic and institutional settings in

which firms operate (37).

On the other hand, Chugh, Meador, & Kumar (38)

established that a high percentage of independent directors

decrease firm performance. In a study conducted by Zabri

et al., (30) about the Top 100 Public Listed Companies in

Malaysia, found that board independence no affects with

performance measured by ROA and ROE. This study has

revealed that in UAE, the independent directors are not

motivated to serve the firm’s performance (39). Hence,

Detthamrong, Chancharat, & Vithessonthi (40) they found

that for an average firm, Corporate Governance board

independence has no effect on performance.

2.4 Mediating effect of managerial ownership

Managerial ownership has been identified as an

effective corporate governance mechanism as it helps

align the interest of managers and shareholders (42).

According to the agency model, Jensen, M. C., (48) argue

that there is

a convergence of interests between

shareholders and managers as the managers' ownership

increases, and thus higher managerial ownership should

reduce agency costs and hence increase firm performance.

But there exists empirical evidence that the correlation

between the ownership of the managers and the

performance of the firm and the value of the market are

mixed (49).

Previous studies have revealed findings that

increasing managerial ownership in the firm is an

important issue is associated with higher firm

performance and firm value (50). And a study Fauzi &

Locke (51) in New Zealand's listed firms, showed that

managerial ownership has a positive and significant

relationship with firm performance, suggesting the

existence of the higher managerial ownership increase

firm performance. In Jordan context, a study conducted by

Alabdullah et al., (14) shows that there is a positive

relationship between managerial ownership and firm

performance. As found there is a positive relationship and

highly significant for 109 companies listed at Amman

Stock Exchange (ASE) for the relationship between

managerial ownership and financial performance (52). On

the other hand, Demsetz (53) implies that the increased

level of insider ownership may reduce corporate

performance. As Tam & Tan (54) contend that ownership

2.3 CEO Duality and firm performance

Firms in which CEO and Chairman of the board are

separated stakeholders are likely to gain confidence in the

firms’ ability to raise additional capital and chances of less

of the bankruptcy of the firm's (41). However, Some

Researchers agreed that there is no single optimal

leadership structure because both duality and separation

perspectives have related costs and benefits. Thus, duality

will be beneficial for some firms while separation is likely

valuable for others (42). Thus, A dual leadership structure

is when the CEO and the chairperson of the board is the

same person (18).

There are some theories to explain why some firms

have chosen to combine the roles of CEO and chairman.

Agency theory argues that CEO duality hinders the

board’s ability to monitor management. Fama & Jensen

(

10) and Jensen (43) argue that CEO duality may hinder

concentration has a negative relation with firm

performance in Malaysia.

the board’s ability to monitor management and thereby

increase the agency cost. Ehikioya, Rechner, & Dalton

Researcher far examined the implications of the

impact of corporate governance on firm performance from

the perspectives of board structure. And taken into

account board size, its independence, CEO duality

assisting the board in arriving at governance decisions,

which, in turn, has an impact on firms performance. And

in agreement with a study Noradiva, Parastou, & Azlina

(55) in respect of the mediating effect of managerial

ownership, it is possible there the mediating effect of

managerial ownership on the relationship between the

(

44), report that firms with a separate CEO and chairman

consistently outperform firms with combined titles. Gillan

45) documents that separation of CEO and chairman

(

would improve the performance of the firm since the

board has unbiased authority to watch the CEO’s

functions. As Hashim & Devi (46) pointed out that

companies should to divided the roles of CEO and

chairperson to avoid a concentration of power in the hands

of a single person and to provide an effective system of

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Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 760-767

board of directors and firm performance. There is also the

possibility that managerial ownership concentration and

board composition may be related to each other, and that

large shareholders may use their influence to select

directors who are less likely to monitor as a way of

entrenching themselves (56). Based on the above

explanation, according to agency theory, resource

dependence theory, and stewardship theory, the following

hypotheses were developed:

H1. There is a positive effect of mediating of

managerial ownership on the association between the

board of directors size and firm performance.

H2. There is a positive effect of mediating of

managerial ownership on the association between the

board of directors independence and firm performance.

H3.There is a positive effect of mediating of

managerial ownership on the association between CEO

duality and firm performance.

+ the market value of total equity)] / the book value of total

assets.

Board of directors as an independent variable include

board size (BZ), the total number of members the board of

directors in the firm during the accounting year. The board

independence (BDIND), percentage of independent non-

executive directors on the board of directors. (The

independent non-executive directors on the board of

directors to total board size). CEO duality (CEO), CEO

Duality is defined as the position of the chairman of the

board and CEO (equals 1 if the role of chairman and CEO

are combined, and 0 otherwise). Moderate variable

includes managerial ownership (MAO), and it is the

percentage of shares held by members of the board of

directors to the total shares in the company.

This particular research comprised of selected public

listed companies on Amman Stock Exchange from 2009

to 2017. Therefore, companies not listed during the

investigation period were excluded from the sample

selection for this research. Therefore, the samples were

collected based on the availability of the companies which

had already been listed during the period of the

investigation. Meanwhile, the second criterion that was

considered for sample selection was the availability of the

selected companies’ financial data required for the

analyses in this study. Besides that, companies which had

losses in their business transaction activities were also

excluded from the samples in this research. Furthermore,

selection of the samples was based on the list of

companies provided by the Amman Stock Exchange.

Therefore, the database of Thompson Data Stream was

used in order to retrieve the data from the selected

companies. Thus, the final sample that was gathered for

this particular study comprised of 180 public listed

companies on Amman Stock Exchange. The type of data

used in this study is in the form of balanced panel data.

Hence, from these samples, the total firm years of

companies tested in this particular study was 1620. For the

data analyses, the study employed Fixed Effect regression

method in order to investigate the association between

selected components with the changes in the firm

performance in the business organization. Based on table

Research Methodology

.1 Study population sample and resources of data

The data of the current study consists of the public

shareholder's companies listed on the Amman Stock

Exchange (ASE), excluding banks sector. And in order to

ensure the robustness of the research and that the

dimensions of the Corporate Governance were taken

based on the local Corporate Governance dimensions

rather than general or international dimensions of

Corporate Governance. As the Corporate Governance

scoring was based on Jordanian Corporate Governance

guide issued in September 2009. So, studied Jordanian

companies for nine consecutive years of reporting periods

from 2009 to 2017.

The data set of the current study comprises financial

and non-financial information for the companies listed on

ASE through the period 2009-2017, collected from the

available annual reports published on ASE website and of

DataStream site. Where, used the quantitative method in

the current study, and used secondary data to data

collected. So, the study sample consisted of 180

companies from the financial, industrial and service

companies, has been summarized in Table 1.

above, the model used in this particular study is as

follow:

Table1:Sample selection

Sector

Total firm-size

1 2 3 4

TQ = β BZ + β BDIND + β CEO + β MAO + ε

Financial sector

Service sector

Industrial sector

Empirical Results and Discussions

The regression of the relationship between the board

Total firm-year in the final sample 180

of directors and firm performance are presented in Table

. This study tested three hypotheses. Model of the study

shows presents the market-based performance, Tobin’s Q.

For the analysis conducted in table 3, the model produces

R-squared of 0.274507%, F-value is 2.888452 and p-value

is 0.000 and highly significant at 5% level. The adjusted

R-squared indicates that 0.179471% Table 3 of the firm

performance can be explained by the overall explanatory

variables in this study.

Based on the Table3, the results were depicted as

there is a negative relationship between all the selected

components towards the changes in the firm performance

in the business organization. These results were explained

below: the regression result in table 3, indicates that the

mediate of managerial ownership has negatively and

significantly on the relationship between board size with

the firm performance measured by (TQ), β = -5.29, t =

.2 Measurement of Variables and Descriptive Statistics

The objective of this study at investigating the impact

of mediating of managerial ownership on the relation

between the board of directors and firm performance, to

analyze the performance of the firm, the current study

used Tobin’s Q as a measure of the dependent variable.

TQ (Tobin, 1969) is a combination of different accounting

as well as market values via considering the value of the

market of a firm. Tobin's Q, as a result, is a powerful tool

to utilize, since it analyses corporate performance from a

market perspective, a market-based measurement which is

categorized as long term, and therefore reflects the present

value of future cash flows based on current and future

information (57). Thus, Tobin’s Q = [The ratio of the

book value of total assets – (the book value of total equity

6.808, p = 0.000.

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Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 3, Pages: 760-767

Table 2:Description of Measurements of the Variables and Literature

Variables

Symbol

Measurement

Source of Information

Dependent Variable:

Firm performance

(The ratio of the book value of total assets –

(the book value of total equity + the market

value of total equity)) / The book value of total

assets.

Thompson Data Stream

(

Tobin’s Q)

Independent variable:

Board size

The total number of members the board of Annual Report

directors in the firm during the accounting year.

Percentage of independent non-executive Annual Report

directors on the board of directors.

When the individual is the chairperson and CEO Annual Report

in same time (equals 1 if the role of chairman and

CEO are combined, and 0 otherwise).

Board independence

CEO duality

BDIND

CEO

Mediating Variable

Managerial ownership

Percentage of shares held by members of the

board of directors to the total shares in the Annual Report

company.

MAO

Source: Authors’ own research.

Table 3: Regression analysis using Tobin's q

Variable

Coefficient

-0.000624

-0.000231

-5.29E-05

-9.59E-05

0.998858

0.274507

0.179471

0.000544

0.000413

9.312300

Std. Error

t-Statistic

-6.543934

-5.765375

6.808085

1.377744

14566.29

Prob.

MAO

9.53E-05

0.0000

CEO

4.01E-05

0.0000

7.78E-06

0.0000

BDIND

6.96E-05

0.0015

6.86E-05

0.0000

R-squared

Adjusted R-squared

S.E. of regression

Sum squared resid

Log-likelihood

Mean dependent var

S.D. dependent var

Akaike info criterion

Schwarz criterion

Hannan-Quinn criteria.

Durbin-Watson stat

0.999178

0.000600

-12.08640

-11.46192

-11.85437

2.225979

F-statistic

2.888452

0.000000

Prob(F-statistic)

The result is inconsistent with the hypothesis that

supports mediate positive of managerial ownership on the

relationship of board size with the firm performance (TQ),

hence H1 is rejected. The result of this study agrees with

the previous study done by (30; 29). On the other hand,

the result of this study disagrees with the previous studies

such as (18; 21). According to the resource dependence

theory that larger board size leads to better firm

performance, because of the different expertise and

members skills. As the agency theory suggests that a board

of directors larger is giving more activity to act as a better

observer of the management.

by Tobin’s Q. The finding reveals that found that board

independence has negative and high significant

relationship at 1% level with the firm performance (TQ),

β = -9.59 t = 1.377, p = 0.0015. Thus, the result is not

regular with the hypothesis that supports a positive of

mediate of managerial ownership on the relationship

between board independence and firm performance.

Therefore, H2 is rejected. This finding agrees with the

previous studies such as (58; 29). And this finding

disagrees with studies by (23; 59). The independence of

the board of directors members are negatively related to

firm performance which suggests that by having more

independent directors on the board lead to weak in firm

performance. And in line with the proposition of the

Agency theory, the basic role of an independent member

Meanwhile, H2 suggests that mediate of managerial

ownership has a negative influence on the relationship the

board independence with the firm performance measured

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2019, Volume 7, Issue 3, Pages: 760-767

is to supervision the governance of a business, having too

many independent members of the board may endanger

the role.

This study supports that mediate of managerial

ownership has negatively related to the relation between

CEO duality firm performance. The model shows that

mediate of managerial ownership has a significant

negative on relate CEO duality with the firm performance

performance, this can be done by relying on a strong

corporate governance system that can lead to an

improvement in Jordanian companies to lead Jordan's

economic growth for the improvement in the future.

Finally, the current research is

response to

recommendations from previous studies for make new

research that aims to study other mechanisms of corporate

governance with firm performance among public listed

companies in the Jordanian capital market such as (60;

61).

(

TQ), β = -0.000231, t = -5.765375, p = 0.000 which

suggests that if the duality between CEO and chairman

could weaken the firm performance. This negative

significant relationship not regular with H3, thus H3 is

rejected. The current result agrees with the study done by

Conclusion

The current study provides evidence on the influence

(

45; 10; 14). While disagreeing with previous studies such

the mediating of managerial ownership on the relationship

between the board of directors as one of the corporate

governance mechanisms and firm performance of public

listed companies on the Amman Stock Exchange. Where,

the purpose of the present study was to examine the

mediating effect of managerial ownership on the

relationship between the board of directors’ mechanisms

as (36; 47; 29). According to agency theory that CEO

duality handicap the board’s ability to observe

management. Meanwhile, stewardship theory support that

dual leadership provides perfect knowledge to managers.

This study provides evidence that managerial

ownership is a positive effect on the relationship between

the board of directors and firm performance. The model

on above, explains that managerial ownership has

significant negative on the relationship for the board of

directors and firm performance (TQ), β = -0.000624, t = -

(

board size, board independence, and CEO duality) and

firm performance of Jordanian companies.

This study comprised of selected public listed

companies on the Amman Stock Exchange from 2009 to

6.543934, p = 0.000 which suggests that if the managerial

2017. Therefore, the samples were collected based on the

ownership is high, it could weaken the relationship

between board of director and firm performance. Agency

theory supports that higher managerial ownership should

decrease agency costs and leads to better firm

performance, but the current study provides evidence that

managerial ownership negatively influences the

relationship between the board of directors and firm

performance.

Based on Figure 1 above, it was also showed as the

model tested in this particular study was stable. This

particular evidence also indicated as the result of the

findings was robust and it was significant to be addressed

in this particular research. Moreover, Figure 1 represents

the trends in the board of directors among the selected

companies.

availability of the companies which had already been

listed during the period of the investigation and financial

data required for the analyses in this study for the selected

companies’. Furthermore, the database of Thompson Data

Stream was used in order to retrieve the data from the

selected companies. Thus, by using the panel data method,

the final sample that was gathered for this particular study

comprised of 180 public listed companies on the Amman

Stock Exchange for 1620 firm years. Where the study

employed the Fixed Effect regression method in order to

investigate the association between selected components.

Based on the findings, found a significant negative effect

of managerial ownership on the relationship between the

board of directors (board size, board independence, and

CEO duality) with firm performance measured by (TQ).

Which suggests that if the managerial ownership is high,

it could weaken the relationship between the board of

director and firm performance.

In addition, the suggestion for future researches may

include more variables for the board of directors, such as

board activity and experience of members, and

investigation in other mechanisms of corporate

governance and its effect on firm performance. Future

researchers can also be using different performance

measures, such as ROA, ROE, and market share. Future

researches may include examining long periods before

and after the reform of corporate governance in Jordan.

-120

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