Investigating the Relationship Between Board of Directors and Corporate Financial in Jordan

Abstract

This study provides clear evidences indication on the association of the board of directors and the corporate financial performance. This study investigates the relationship between board of directors’ mechanism namely (board size, board independence, board meeting frequency, and CEO duality) and corporate financial performance among industrial Jordanian listed corporations on Amman stock exchange (ASE) for the period 2016-2017. Corporate financial performance is measure by Return on Asset (ROA) and Return on Equity (ROE). This study contributes to the existing literature It adds values to the existing literature by providing extensive insights of the role of the board of director and corporate financial performance. The multiple regression analysis used to test the 4 hypotheses. Corporations listed in ASE are the subjects of this study for the years 2016 and 2017. The result of the independent variable namely board size, board independence, board meeting frequency, and CEO duality affects the Return on Asset (ROA) significantly. However, there is only one independent variable namely CEO duality that is insignificantly related to Return on Asset (ROA). Furthermore, the result of multiple regression analysis indicates that there is a significant relationship between highly linked to board size, board independence, and board meeting frequency and Return on Equity (ROE). On other hand contrary, the regression analysis shows the CEO Duality to be insignificantly related to Return on Equity (ROE).