Does corporate governance affect corporate financial performance? A study of the Jordanian Corporations

Abstract

The purpose of this study was to examine the impact of the board of directors and audit committee on the financial performance of Jordanian companies listed on the Amman stock exchange (ASE) by measuring the board and audit committee of using a variety of indicators, including board size, CEO duality audit committee size and audit committee meeting. financial performance is measured by going return on assets and Tobin q. During the study period (2017–2022), 426 industrial and service corporations were examined. The study found that the indexed organizations at ASE during the years 2015–2020 showed full-size financial overall performance in accordance with Jordan's improving understanding of and application of the board of directors' traits. This study found that board size and independence had a CEO duality influence on financial performance. Based on the findings, the study recommends that the codes be evaluated on a regular basis and that corporations be instructed to examine corporate governance principles through legislation and regulations to encourage enterprises to follow these rules. Furthermore, board members' experience, devotion, and independence are reviewed on an ongoing basis. Stock exchanges should also conduct seminars and workshops for company managers and decision-makers to enhance understanding of effective corporate governance, especially its importance. Furthermore, the research found a significant relationship between Audit committee size and meeting and corporate financial performance. Hence, the study recommendations to enhance the validity of audit committee to improve the financial performance.