The Impact of Ownership Structure on Firm Performance in Jordan

Fawwaz Alrwabdah; Char- Lee Lok

This study examines the impact of ownership structure on firm performance for companies listed on the Amman Stock Exchange (ASE) in Jordan from 2015 to 2021. Specifically, it investigates the relationships between institutional, government, and foreign ownership, as well as ownership concentration, and their effects on firm performance measured by Return on Assets (ROA) and Tobin's Q. Using a sample of 158 firms and 1106 firm-year observations, the study employs a Generalized Method of Moments (GMM) estimator to address potential endogeneity issues. The results reveal that ownership structure significantly influences firm performance in the Jordanian context. Ownership concentration shows a strong positive relationship with both ROA and Tobin's Q, suggesting that concentrated ownership can lead to more effective monitoring and improved performance. Foreign ownership demonstrates positive effects on both performance measures, highlighting the benefits of international investment in enhancing both operational and market performance. Government ownership exhibits a positive association with ROA but not with Tobin's Q, indicating that state ownership may improve operational efficiency but not necessarily market perceptions. Institutional ownership shows mixed results, with a significant positive relationship with Tobin's Q but no significant impact on ROA. These findings have important implications for policymakers, investors, and corporate managers in Jordan and similar emerging markets. They suggest that policies to attract foreign investment and maintain some level of ownership concentration may be beneficial for firm performance. However, the mixed results for institutional and government ownership highlight the need for nuanced approaches to corporate governance that consider the varied impacts on different performance metrics. This study contributes to the literature by providing new empirical evidence on ownership-performance dynamics in an emerging market context and offers insights for improving corporate governance practices and policies in Jordan.

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Alrwabdah, F., & Lok, C.-L. (2024). The Impact of Ownership Structure on Firm Performance in Jordan. International Journal of Academic Research in Accounting, Finance and Management Sciences, 14(3), 77–89.

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The Impact of Ownership Structure on Firm Performance in Jordan

Fawwaz Alrwabdah, Char- Lee Lok

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