Economics & Sociology

ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789X
Index PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0
Article information
Title: Does family CEO enhance corporate performance? The case of Jordan
Issue: Vol. 13, No 2, 2020
Published date: 06-2020 (print) / 06-2020 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Zaid Saidat
Middle East University, Jordan

Tareq O Bani-Khalid
Al al-Bayt University, Jordan

Lara Al-Haddad
Yarmouk University, Jordan

Zyad Marashdeh
The Hashemite University, Jordan
Keywords: family business, family CEO, financial performance, multivariate pooled-OLS regression, Jordan
DOI: 10.14254/2071-789X.2020/13-2/3
Index PUBMS: 982f6b60-bef2-11ea-9cc3-fa163e0fa1a0
Language: English
Pages: 43-52 (10)
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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