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Building a corporate governance index (JCGI) for an emerging market: case of Jordan

Author

Listed:
  • Maen F. Nsour

    (Arab Potash Company)

  • Samer A. M. Al-Rjoub

    (Hashemite University)

Abstract

A comprehensive corporate governance index (JCGI, 0–100) is constructed to measure the quality of corporate governance practices of the universe of publicly traded Jordanian firms during 2018–2019. We survey all firms' corporate governance practices and manually collect governance data for listed corporations in Amman Stock Exchange to construct the first JCGI, which comprises five sub-indices and 60 elements.The results show that Jordanian companies did not progress in the corporate governance reform during the study period. The overall JCGI mean value is 67.80%. Sub-index results show that governance is weakest in both board procedure and disclosure, with a mean value of 57.36% and 52.43%, respectively. The board procedure subindex shows that most listed firms practice poor governance. Within the board structure sub-index, only 18% of the study sample has the policy to specify the board's professional qualifications and training requirements. Results of shareholders' rights show a rigid and nontransparent environment in the enterprises' control structure.

Suggested Citation

  • Maen F. Nsour & Samer A. M. Al-Rjoub, 2022. "Building a corporate governance index (JCGI) for an emerging market: case of Jordan," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(2), pages 232-248, June.
    • Handle: RePEc:pal:ijodag:v:19:y:2022:i:2:d:10.1057_s41310-021-00139-9
    DOI: 10.1057/s41310-021-00139-9
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    References listed on IDEAS

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    1. Black, Bernard S. & de Carvalho, Antonio Gledson & Gorga, Érica, 2012. "What matters and for which firms for corporate governance in emerging markets? Evidence from Brazil (and other BRIK countries)," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 934-952.
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    More about this item

    Keywords

    Corporate governance determinants; Corporate governance index; Corporate governance model; Governance elements;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • G19 - Financial Economics - - General Financial Markets - - - Other

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