Appendix B Key Economic Indicaros
Total Page:16
File Type:pdf, Size:1020Kb
Assessment Of Corporate Governance Practices In Jordan: An Empirical Investigation Item Type Thesis Authors Hendawi, Raed Diab Moh’d Rights <a rel="license" href="http://creativecommons.org/licenses/ by-nc-nd/3.0/"><img alt="Creative Commons License" style="border-width:0" src="http://i.creativecommons.org/l/by- nc-nd/3.0/88x31.png" /></a><br />The University of Bradford theses are licenced under a <a rel="license" href="http:// creativecommons.org/licenses/by-nc-nd/3.0/">Creative Commons Licence</a>. Download date 29/09/2021 11:17:13 Link to Item http://hdl.handle.net/10454/12980 University of Bradford eThesis This thesis is hosted in Bradford Scholars – The University of Bradford Open Access repository. Visit the repository for full metadata or to contact the repository team © University of Bradford. This work is licenced for reuse under a Creative Commons Licence. ASSESSMENT OF CORPORATE GOVERNANCE PRACTICES IN JORDAN: AN EMPIRICAL INVESTIGATION R.D.M.HENDAWI PHD 2013 Assessment Of Corporate Governance Practices In Jordan: An Empirical Investigation Raed Diab Moh’d HENDAWI Submitted for the Degree of Doctor of Philosophy Faculty of Management University of Bradford 2013 Abstract Raed Diab Moh’d Hendawi Assessment of Corporate Governance Practices in Jordan: An Empirical Investigation Keywords: Corporate Governance (CG), Critical Factors (CF), Best Practice (BP), Shareholders, Board of Directors (BOD), Organisation for Economic Co- operation and Development (OECD) Principles. Corporate Governance (CG) nowadays is on the agenda of most developed and developing countries, including Jordan, and is receiving considerable attention in the business world as well as in the area of academic research, which is an indication of its importance for business development and society as a whole. The knowledge base about CG in developing countries appears to be limited, but it is growing in size and importance. This study therefore aims to investigate current CG practices and barriers to the development of good CG practices in firms. In order to accomplish the research objectives, a mixed research methodology was adopted. The findings of the study contribute to knowledge by providing empirical data to test and extend the theory of CG. The results suggest that most big and old firms are applying best practice of good CG. Regarding factors inhibiting the practice of effective CG, the results indicate that weakness of the legal environment for firms and lack of knowledge of BODs about CG principles are the most important factors. The empirical results find that constitution, compliance and conscience will affect firm’s performance positively. Separation between the position of i CEO and Chairman, the existence of independent NEDs, the use of board subcommittees and a strong disclosure regime also help firms to improve performance. On the basis of the empirical results, the study recommends that the government needs to reform the relevant legislation. These suggestions may strengthen the internal governance of firms, thereby increasing performance and maximise shareholders’ wealth. ii Dedication The Memory of My Late Parents, Diab and Aisha May Allah Bless Their Soles iii AKNOWLEDGMENTS Conducting a PhD research is not an easy task as it requires a commitment and willingness to overcome multiple challenges. However, I find this task and challenge very interesting because there is a high level of creativity involved in this task as well as exploring new insights and contributing to knowledge is also involved in this task. This long journey is successfully completed with continuous support and encouragement from a number of persons whom I want to deeply thank. First and foremost, I would like to thank my supervisors, Professor Mohamed Zairi and Professor Carole Howorth for their continuous support and encouragement. I am truly fortunate to have the opportunity to work with such a great persons and excellent supervisors. Throughout my PhD study they have taught me to set high goals and challenged me to always perform at my best. I owe my sincere gratitude and appreciation for their assistance, valuable feedback and comments. I will be forever indebted. Prof. Howorth and Prof. Zairi thank you from the bottom of y heart. My endless love to my children: Taqi, Hala, Marah and Zain, who filled my life with happiness, enthusiasm, and energy to face challenges. Lastly, many thanks for everyone helped, supported, and encouraged me in any respect during my journey, and affected me positively to complete this research. iv Table of Contents ABSTRACT ................................................................................................................................................. I AKNOWLEDGMENTS .......................................................................................................................... IV TABLE OF CONTENTS .......................................................................................................................... V LIST OF FIGURES .................................................................................................................................. IX LIST OF TABLES ..................................................................................................................................... X LIST OF ABBREVIATIONS .................................................................................................................. XI CHAPTER ONE .........................................................................................................................................1 1 THESIS INTRODUCTION.............................................................................................................1 1.1 INTRODUCTION ...................................................................................................................................... 1 1.2 JORDANIAN ECONOMY .......................................................................................................................... 4 1.3 PRIVATISATION IN JORDAN.................................................................................................................. 7 1.4 CORPORATE GOVERNANCE CODE OF JORDAN .................................................................................. 8 1.5 WHY JORDAN? ....................................................................................................................................... 9 1.6 THE RATIONALE OF THE STUDY ...................................................................................................... 12 1.7 THE MOTIVATION AND IMPORTANCE OF THE STUDY .................................................................. 13 1.8 THE RESEARCH OBJECTIVES ............................................................................................................ 15 1.9 THESIS LAYOUT .................................................................................................................................. 17 CHAPTER TWO .................................................................................................................................... 19 2 LITERATURE REVIEW ............................................................................................................. 19 2.1 INTRODUCTION ................................................................................................................................... 19 2.2 CORPORATE GOVERNANCE DEFINITIONS ...................................................................................... 20 2.3 CORPORATE GOVERNANCE MODELS .............................................................................................. 24 2.3.1 United Kingdom ................................................................................................................................ 26 2.3.2 United States of America .............................................................................................................. 28 2.4 CORPORATE GOVERNANCE IN DEVELOPING COUNTRIES ............................................................ 29 2.4.1 The Legal System in Jordan ......................................................................................................... 36 2.4.2 Formation of a Public Shareholding Firm ............................................................................ 37 2.4.3 Capital Requirements..................................................................................................................... 38 2.4.4 Reporting Requirements ............................................................................................................... 38 2.5 JORDANIAN CAPITAL MARKET ......................................................................................................... 40 2.5.1 Jordan Securities Commission (JSC) ........................................................................................ 43 2.5.2 The Securities Depository Centre (SDC) ................................................................................ 45 2.5.3 The Amman Stock Exchange (ASE) ......................................................................................... 45 2.6 FOREIGN INVESTMENT ...................................................................................................................... 47 2.7 SUMMARY ............................................................................................................................................ 50 CHAPTER THREE ...............................................................................................................................