Board characteristics and firm performance: The case of Jordanian non-financial institutions

Abstract

The study aims to examine the impact of board characteristics on firm performance of non-financial institutions in Jordan. The study employs the random effects regression model to analyze the panel data of 77 non-financial institutions of the industrial and services sector over the period 2008–2019. Firm performance is measured by return on assets ROA. While board characteristics were explained by board size, CEO duality, CEO tenure, non-executive directors (NEDs), and a number of board meetings. Firm age and firm size were added to our model as control variables. Our results reveal that board size, CEO tenure, non-executive directors (NEDs), firm age, and firm size have a positive significant impact on firm performance, whereas the CEO duality and a number of board meetings have a negative significant impact on firm performance. This paper will contribute to the ongoing debate on the relationship between the board characteristics and firm performance. Therefore, the current study extends previous literature by providing empirical evidence about the relationship between board characteristics and a firm performance. Particularly in developing countries, there is relatively a little researched area. Jordanian firms are needed to consider the significance of the board characteristics especially, for the non-financial institutions that can help them in designing the board strategies to enhance their performance. Therefore, Jordanian data will offer new empirical evidence in an emerging market, which will provide a better understanding of the relationship between board characteristics and firm performance.

Exploring the mediating role of corporate social responsibility in the connection between board competence and corporate financial performance amidst global uncertainties

“…During the Covid-19 crisis, we discovered that many businesses engaged in considerable CSR and viewed society as a stakeholder in their business model, even during resource scarcity (Hassan et al, 2021a). Therefore, the board of directors who Borlea et al, 2017;Ghazalat et al, 2017;Haddad et al, 2015;Manrique & Marti-Ballester, 2017;Marashdeh et al, 2021;. As shown by an apparent disparity in corporate performance, there is still a significant gap in corporate understanding of the significance of CSR and the level of CSR disclosure in developing country markets, specifically, Jordanian markets (Al Amosh Manrique & Marti-Ballester, 2017;Williams, 1999).…”

“…The prior literature indicated a significant gap concerning the level of knowledge and skill that should be owned by the board of directors towards CSR performance during the Covid‐19 pandemic has been a source of worldwide concern and uncertainty, specifically in developing countries, including, the board competence, diversity of boards, board expertise and cultural dimensions and ownership structures, whether mainly government or family‐owned (Al Amosh & Khatib, 2021; Borlea et al, 2017; Ghazalat et al, 2017; Haddad et al, 2015; Manrique & Marti‐Ballester, 2017; Marashdeh et al, 2021; Nguyen et al, 2023). As shown by an apparent disparity in corporate performance, there is still a significant gap in corporate understanding of the significance of CSR and the level of CSR disclosure in developing country markets, specifically, Jordanian markets (Al Amosh & Khatib, 2021; Manrique & Marti‐Ballester, 2017; Nguyen et al, 2023; Williams, 1999).…”

“…Prevailing literature underscores a conspicuous void concerning the depth of proficiency and acumen that boards should inherently possess in steering CSR outcomes, especially within developing landscapes. This void spans across board competency, board heterogeneity, domain‐specific expertise, cultural nuances, and the nature of ownership structures, be it predominantly governmental or family‐centric (Al Amosh & Khatib, 2021; Borlea et al, 2017; Ghazalat et al, 2017; Haddad et al, 2015; Manrique & Marti‐Ballester, 2017; Marashdeh et al, 2021; Nguyen et al, 2023).…”

“…Prior literature has expressed concerns about gaps in the understanding and capabilities of boards, especially regarding CSR performance in the shadow of the pandemic, particularly within developing countries. This encompasses aspects such as board competence, diversity, expertise, cultural dimensions, and the implications of ownership structures, whether predominantly government or family‐owned (Al Amosh & Khatib, 2021; Borlea et al, 2017; Ghazalat et al, 2017; Haddad et al, 2015; Manrique & Marti‐Ballester, 2017; Marashdeh et al, 2021; Nguyen et al, 2023). Second, the disparity in corporate performance and a conspicuous gap in the comprehension and disclosure levels of CSR, especially in developing markets such as Jordan, underscores the timely relevance of our study (Al Amosh & Khatib, 2021; Manrique & Marti‐Ballester, 2017; Nguyen et al, 2023; Williams, 1999).…”

The impact of family ownership on the relationship between the existence of the woman Board of Commissioners and firm performance

“…Subsequently, the audit committee is measured by summing up the audit committees (Al-Farooque, Buachoom & Sun, 2020), and firm size is measured by the natural logarithm of total assets (Sun & Zou, 2021). Finally, firm age is measured by the number of years from when the company was founded until now (Marashdeh, Alomari, Aleqab & Alqatamin, 2021), and leverage is measured based on the total debt divided by total assets (Ararat & Yurtoglu, 2021).…”