The Impact of Governance on the Performance of Jordanian Commercial Banks as measured by Tobin’s Q

Abstract

The study aimed to analyze the impact of corporate governance on the performance of commercial banks listed on the Amman Stock Exchange. In order to improve the performance of banks and apply governance as a mechanism to enhance competitiveness and spread the culture of governance among financial institutions, The population of the consisted of all banks listed on the Amman Stock Exchange, where the governance was measured through (the size of the board of directors, the independence of the board of directors, the duplication of the position of the chairman of the board of directors, and foreign ownership), while the performance of Jordanian commercial banks was measured through the (Tobin`s Q). The descriptive and analytical approach was followed, and many statistical methods were used, such as descriptive statistics, regression analysis and a random effect. The results proved that there is no effect of the size of the board of directors and the independence of the board of directors on the performance of banks, and that there is a positive impact of both foreign ownership and the size of the bank on the performance of banks, while there is a negative impact of the dual position of the chairman of the board on the performance of commercial banks. The study recommended the following for banks to focus more on implementing governance instructions, in order to have a positive impact on the performance of commercial banks in Jordan.