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Jordanian Evidence of the Relationship between Agency Cost and Corporate Governance

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  • Imad Ramadan

Abstract

This study aimed to shed light on the role of corporate governance tools in mitigating the agency problem in the Jordanian industrial companies, through studying the effect of the internal corporate governance tools; the ownership structure, the board of directors and capital structure on the asset turnover rate as an inverse indicator to the agency costs.The study concluded that the ownership structure in particular the firms ownership and ownership focus, the characteristics of the board of directors in terms of the number of members and members’ independence, separation of the positions of chairman of the board of directors and chief executive officer of the company, in addition to bank loans as an indicator of capital structure constitutes tools for effective corporate governance in the Jordanian industrial companies.

Suggested Citation

  • Imad Ramadan, 2016. "Jordanian Evidence of the Relationship between Agency Cost and Corporate Governance," Modern Applied Science, Canadian Center of Science and Education, vol. 10(10), pages 160-160, October.
    • Handle: RePEc:ibn:masjnl:v:10:y:2016:i:10:p:160
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    References listed on IDEAS

    as
    1. James S. Ang & Rebel A. Cole & James Wuh Lin, 2000. "Agency Costs and Ownership Structure," Journal of Finance, American Finance Association, vol. 55(1), pages 81-106, February.
    2. Kole, Stacey R., 1995. "Measuring managerial equity ownership: a comparison of sources of ownership data," Journal of Corporate Finance, Elsevier, vol. 1(3-4), pages 413-435, April.
    3. Singh, Manohar & Davidson III, Wallace N., 2003. "Agency costs, ownership structure and corporate governance mechanisms," Journal of Banking & Finance, Elsevier, vol. 27(5), pages 793-816, May.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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