Corporate Governance and Employee Productivity: Evidence from Jordan

Abdullah Ajlouni (), Francisco Bastida and Mohammad Nurunnabi
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Abdullah Ajlouni: International School of Doctoral Studies, University of Murcia, 30003 Murcia, Spain
Francisco Bastida: Department of Accounting, Prince Sultan University, P.O. Box 66833, Riyadh 11586, Saudi Arabia
Mohammad Nurunnabi: Department of Accounting, Prince Sultan University, P.O. Box 66833, Riyadh 11586, Saudi Arabia

IJFS, 2024, vol. 12, issue 4, 1-17

Abstract: This research paper aims to investigate the impact of ownership concentration, insider ownership, and board size on employee productivity for 136 Jordanian public shareholding firms listed on the Amman Stock Exchange (ASE) from 2012 to 2021. Ownership concentration has been measured by Herfindahl–Hirschman Index (HHI), whereas insider ownership and board size have been represented as the proportion of shares held by insiders and by the number of board members, respectively. Lastly, employee productivity has been measured using a data envelopment analysis (DEA) tool. We employed ordinary least squares regression (OLS) including firm-year-fixed effects. Our empirical results indicate a non-linear relation between ownership concentration and employee productivity, whereby the productivity of employees increases in firms with a proportion of ownership concentration less than 60%. In addition, we found a non-linear relation between insider ownership and employee productivity, whereby the productivity of employees increases in firms with proportion of insider ownership less than 50%. Moreover, we found a non-linear relation between board size and employee productivity, whereby the productivity of employees increases in firms that have less than 11 board members. Our outcome contributed to the knowledge found in the previous literature, as it is the first to highlight the productivity of employees in emerging economies, such as the economy in Jordan. Furthermore, our findings could be useful for the Jordan Securities Commission (JSC) and the ASE on their continuous process to improve and develop corporate governance instructions.

Keywords: corporate governance; ownership concentration; board size; insider ownership; employee productivity; firm performance; ASE; data envelopment analysis (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2024
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