Jordanian Evidence of the Relationship between Agency Cost and Corporate Governance

  •  Imad Ramadan    


This study aimed to shed light on the role of corporate governance tools in mitigating the agency problem in the Jordanian industrial companies, through studying the effect of the internal corporate governance tools; the ownership structure, the board of directors and capital structure on the asset turnover rate as an inverse indicator to the agency costs.

The study concluded that the ownership structure in particular the firms ownership and ownership focus, the characteristics of the board of directors in terms of the number of members and members’ independence, separation of the positions of chairman of the board of directors and chief executive officer of the company, in addition to bank loans as an indicator of capital structure constitutes tools for effective corporate governance in the Jordanian industrial companies.

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