|Title:||Does family CEO enhance corporate performance? The case of Jordan|
Vol. 13, No 2, 2020
Published date: 06-2020 (print) / 06-2020 (online)
Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Middle East University, Jordan
Tareq O Bani-Khalid
Al al-Bayt University, Jordan
Yarmouk University, Jordan
The Hashemite University, Jordan
|Keywords:||family business, family CEO, financial performance, multivariate pooled-OLS regression, Jordan|
|JEL classification:||D02, O17, P31|
There is a high level of family ownership among Jordanian firms, which is perceived to be the reason why family members are often appointed as CEOs. Advantages and drawbacks of having a family CEO, who tends to concentrate corporate control within the family and minimize ownership dispersion, continue to be debated widely. This study adds to this debate by focusing on the under-researched Jordanian context, where family companies are prominent. A sample of 56 Jordanian listed family firms and 392 firm-year observations for 2009 to 2015 have been used to determine that overall family CEOs are negatively related to corporate performance. This finding is applicable to both accounting-based and market-based performance, stemming from the ROA and Tobin’s Q test results. Further analysis shows an increased negative effect in family firms where non-family shareholders have greater ownership. The study concludes that increases in the level of ownership concentration leads to devaluation among Jordanian family firms.
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