The Ownership Structure Influence on Firm Performance in Jordan

Abstract

Over the past two decades, the relationship among structure of ownership, Governance and
Performance has been a significant and ongoing issue in corporate governance and finance
literature. This research attempts to investigate the influence of ownership structure on firm
performance. Also, this study used sample panel data from 2009-2018. The study also employed
a panel regression analysis. The study considers one measure of performance, namely, Tobin's Q
ratio (TQ), and four measures of ownership structure viz; Managerial ownership, government
ownership, institutional ownership, and family ownership. The results revealed that managerial
ownership and government ownership, have a significant and negative effect on firm
performance; while, institutional ownership and family ownership have a significant and positive
effect on firm performance in Jordan. Consequently, this study recommended enhancing the
shareholding of foreign promoters and non-promoting institutions to allow companies to attract
technological and managerial expertise and to ensure effective monitoring that is crucial to
improving financial performance. Besides, investors, policy-makers, and stakeholders should be
informed about the relationship between the firm's ownership structure and results. After
considering this information, investors can make appropriate portfolio decisions.