Corporate governance and risk taking of Jordanian listed corporations: the impact of board of directors

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The aim of this study is to evaluate the compliance level of corporate governance rules and examine the impact of this compliance on risk taking of corporations in Jordan. This study used panel data of the listed corporations in Amman Stock Exchange from 2013 to 2017. Corporate governance index was constructed to gauge the compliance level of corporate governance rules. The results show a good level of overall compliance of corporate governance rules. As for the compliance of the categories of corporate governance rules, rules of transparency and disclosure are ranked first, while rules of general meeting assembly are ranked fourth. The regression results report a negative influence of corporate governance and corporate risk taking. In addition, four governance variables concerning the features of the board of directors are used in the study. The results reveal a negative impact of the size of the board of directors, independence of the board, and committees of the board on corporate risk taking. It is expected that the outcomes of the study can be used by management of the corporations in addition to the Jordanian Securities Commission that seek to enhance confidence in the Jordanian capital market.

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    • Table 1. Descriptive statistics of overall CGI
    • Table 2. Classification of corporations based to the value of CGI
    • Table 3. Descriptive statistics of sub-CGI
    • Table 4. Results of multicollinearity test
    • Table 5. Results of heteroscedasticity test
    • Table 6. Results of autocorrelation test
    • Table 7. Regressions models on corporate risk taking