Ownership structure and corporate cash holdings in Jordan: the role of government ownership

Ahmad Alkhataybeh, Safaa Adnan AlSmadi, Alaaeddin Al-Tarawneh, Mohammad A. Khataybeh and Mohammad Ziad Shakhatreh

Journal of Applied Economics, 2023, vol. 26, issue 1, 2279444

Abstract: Using a dataset of 107 listed firms in Jordan from 2009 to 2018, we employed the generalized method of moments (GMM) to examine the effect of ownership structure on the level of corporate cash holdings. We found that higher government ownership is associated with higher cash holdings. On the other hand, different forms of ownership, namely block holding and individual and foreign ownership, were found to be insignificant. We further examined why firms in Jordan hold cash, concluding that when the level of government ownership rises, firms do not employ cash reserves for investments nor for dividend payments, which in light of governmental political purposes could be a clear indicator of agency problems.

Date: 2023
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DOI: 10.1080/15140326.2023.2279444

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