The Effect of Board Independence and Board Meeting on Firm Performance: Evidence from Jordan
Journal of Finance and Accounting
Volume 6, Issue 5, September 2018, Pages: 105-109
Received: Sep. 19, 2018; Accepted: Oct. 9, 2018; Published: Oct. 29, 2018
Views 989      Downloads 254
Almontaser Abdallah Mohammad Qadorah, Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Sintok, Malaysia
Faudziah Hanim Bt Fadzil, Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Sintok, Malaysia
Article Tools
Follow on us
The purpose of this study to examine the relationship between the internal corporate governance mechanism related to the board of directors’ characteristics namely (board independence and frequency of board meetings) and firm performance in Jordanian listed firms. The study used Cross-sectional data for the year 2013, with a sample of 64 industrial firms listed in the Amman Stock Exchange. Firm performance was measured by return on assets (ROA) as an accounting-based performance measure. The current study utilized multiple linear regression analysis to test the hypotheses and examine the relationship between the board of directors’ characteristics namely (board independence and frequency of board meetings) and firm performance. The findings showed that board independence is significantly and positively related to ROA. The current study found an insignificant relationship between the frequency of board meetings and firm performance measured by ROA. These results indicate that the monitoring role of the more independent board could have a significant influence on firm performance. Contradictory to expectation, the result of this study reveals that the frequency of board meetings do not determine the performance of industrial Jordanian firms. Further, Current study findings provide the idea to future researchers for further empirically explore the importance of the board of director's characteristics in Jordan. This study provides several important implications for the theory, regulatory authorities and policy makers and academia and researchers.
Corporate Governance, Board of Director’s Independence, Board Meeting, Firm Performance
To cite this article
Almontaser Abdallah Mohammad Qadorah, Faudziah Hanim Bt Fadzil, The Effect of Board Independence and Board Meeting on Firm Performance: Evidence from Jordan, Journal of Finance and Accounting. Vol. 6, No. 5, 2018, pp. 105-109. doi: 10.11648/j.jfa.20180605.11
Copyright © 2018 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License ( which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
Honoré, F., Munari, F. and de La Potterie, B. V. P., 2015. Corporate governance practices and companies’ R&D intensity: Evidence from European countries. Research policy, 44(2), pp. 533-543.
Li, W., Bruton, G. D., & Filatotchev, I. (2016). Mitigating the dual liability of newness and foreignness in capital markets: The role of returnee independent directors. Journal of World Business, 51(5), 787-799.
Bosse, D. A., & Phillips, R. A. (2016). Agency theory and bounded self-interest. Academy of Management Review, 41(2), 276-297.
Ramachandran, J., Ngete, Z. A., Subramanian, R., &Sambasivan, M. (2015). Does corporate governance influence earnings management? Evidence from Singapore. The Journal of Developing Areas, 49(3), 263-274.
Swamy, V. (2011). Corporate Governance and Firm Performance in Unlisted Family Owned Firms. International Journal of Business Insights & Transformation, 4(2).
Bhaduri, S. N., & Selarka, E. (2016). Corporate Governance: An Overview. In Corporate Governance and Corporate Social Responsibility of Indian Companies (pp. 61-72). Springer Singapore.
Fama, E., & Jensen, M. (1983). Agency problems and residual claims. The Journal of Law and Economics, 26(2), 327-349.
Lin, Z. J., Liu, M., & Zhang, X. (2016). The Development of Corporate Governance in China. Asia-Pacific Management Accounting Journal, 1(1).
Jensen, M., & Meckling, W. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Financial Economics, (3(4), 305-360.
Chin, T., Vos, E., & Case, Q. (2004). Levels of ownership structure, board composition and board size seem unimportant in New Zealand. Corporate Ownership and Control, 2, 119–128.
Fosberg, R. H. (1989). Outside directors and managerial monitoring. Akron Business and Economic Review, 20(2), 24.
Klein, P., Shapiro, D., & Young, J. (2005). Corporate governance, family ownership and firm value: the Canadian evidence. Corporate Governance: An International Review, 13(6), 769-784.
Azeez, A. A. (2015). Corporate governance and firm performance: evidence from Sri Lanka. Journal of Finance, 3(1), 180-189.
Armstrong, C. S., Core, J. E., & Guay, W. R. (2014). Do independent directors cause improvements in firm transparency? Journal of financial economics, 113(3), 383-403.
Gavrea. C., & Stegerean. R. (2012). Corporate governance and firm performance: The Romanian case. Managerial Challenges of the Contemporary Society, 3(1), 179-185.
Khanchel, 1. (2007). corporate governance: measurement and determinant analysis. Managerial Auditing Journal, 22(8), 740-760.
Liang. Q., Xu, P., & Jiraporn, P. (2013). Board characteristics and Chinese bank performance. Journal of Banking & Finance, 37(8), 2953-2968.
Lin, S. & Hu. S. (2002). A family member or professional management? The choice of a CEO and its impact on performance. Corporate Governance, 15(6), 1348-1363.
Liao, L., Lin, T. P., & Zhang, Y. (2016). Corporate Board and Corporate Social Responsibility Assurance: Evidence from China. Journal of Business Ethics, 1-15.
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), 341-350.
Sahu, T. N., & Manna, A. (2013). Impact of Board Composition and Board Meeting On Firms' Performance: A Study of Selected Indian Companies. Vilakshan: The XIMB Journal of Management, 10(2).
Khan, M., & Javid, A. (2011). Determinants of board effectiveness: Logit model ferheenkayani. Interdisciplinary Journal of Contemporary Research in Business, 3(2). 1970- 1981.
Kang, S. A., & Kim, Y. S. (2011). Does earnings management amplify the association between corporate governance and firm performance? Evidence from Korea. International Business & Economics Research Journal (IBER), 10 (2).
Hsu, W., &Petchsakulwong, P. (2010). The impact of corporate governance on the efficiency performance of the Thai non-life insurance industry. The Geneva Papers on Risk and Insurance Issues and Practice, 35(1), S28-S49.
Kamardin, H. (2009). The impact of corporate governance and board performance on the performance of public listed companies in Malaysia. Ph. D. Dissertation, University Sains Malaysia.
Zattoni, A., Gnan, L., &Huse, M. (2015). Does family involvement influence firm performance? Exploring the mediating effects of board processes and tasks. Journal of Management, 41(4), 1214-1243.
Garcia-Sanchez, I. M. (2010). The effectiveness of corporate governance: Board structure and business technical efficiency in Spain. CEJOR, 18, 311-339.
Wu, Q., Wang, P., & Yin, J. (2007). Audit committee, board characteristics and quality of financial reporting: An empirical research on Chinese securities market. Frontiers of Business Research in China, 1(3), 385-400.
Danoshana, S., & Ravivathani, T. (2014). Impact of corporate governance framework on the organizational performance. A study on financial institutions in Sri Lanka International Journal of Technological Exploration and Learning, 16(1), 73-78.
Ahmed Sheikh, N., Wang, Z., & Khan, S. (2013). The impact of internal attributes of corporate governance on firm performance: evidence from Pakistan. International Journal of Commerce and Management, 23(1), 38-55.
Noor, M. A. M. (2011). The effect of implementation of Malaysia code of corporate governance (MCCG) 2007 on corporate governance attributes and financial performance. Ph. D. DPA Dissertation, University Utara Malaysia.
Al-Najjar, B. (2014). Corporate governance, tourism growth and firm performance: Evidence from publicly listed tourism firms in five Middle Eastern countries. Tourism Management, 42, 342-351.
Honeine, S., & Swan, P. (2010). Is company performance dependent on outside director ‘skin in the game?’. Available at SSRN 1746536.
Masulis, R. W., Wang, C., & Xie, F. (2012). Globalizing the boardroom—the effects of foreign directors on corporate governance and firm performance. Journal of Accounting and Economics, 53(3), 527-554.
De Andres, P. Azofra, V. & Lopez, F. (2005). Corporate boards in OECD countries: Size, composition, functioning and effectiveness. An International Review, 13(2), 197-210.
Haniffa, R., & Hudaib, M. (2006). Corporate governance structure and performance of Malaysian listed companies. Journal of Business Finance & Accounting, 33(7), 1034-1062.
Krivogorsky, V. (2006). Ownership, board structure, and performance in continental Europe. International Journal of Accounting, 41(2), 176-197.
Lefort, F., &Urzua, F. (2008). Board independence, firm performance and ownership concentration: Evidence from Chile. Journal of Business Research, 61(6), 615-622.
Limpaphayom, J., Connelly, P. (2006). Board characteristics and firm performance: evidence from the life insurance industry in Thailand Chulalongkorn. Journal of Economics, 16(2), 101-124.
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
Tel: (001)347-983-5186