Journal of Finance and Investment Analysis
The Relationship Between Corporate Governance Practices and Financial Performance: Evidence from Amman Stock Exchange
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Abstract
The objective of the study was to establish the relationship between corporate governance Index and financial performance and evidence from Amman stock exchange. To achieve this objective, this study applied descriptive research structure. In this case, the research focused on the 181 firms listed at the Amman Stock Exchange (Appendix I). The statistical techniques that was applied to analyze collected data included descriptive statistics. The information analyzed revealed that the model summary indicated that the Rē to be 0.243. This meant that 24.3% of the variation in performance (ROA) was due to the predictor variable captured in the study. This also implied that 75.7% of the variation in ROA was attributed to the measurements of error and other factors that could have had an effect on the ROA but were not captured in the study. The estimated model showed that ROA when other factors are held constant was 1.610. The outcomes also revealed that governance score had a beta coefficient of 0.573 indicating that for every unit increase in governance score on the ROA went up by 0.573. This relationship is significance since P-value of 0.025<0.05. Therefore, the model qualified as a good predictor.
Keywords: Corporate Governance, Financial Performance, Amman stock Exchange.
