Journal of Accounting and Management Information Systems (JAMIS)


COMPLIANCE WITH THE PRINCIPLES OF CORPORATE GOVERNANCE: DIFFERENT PERSPECTIVES FROM JORDAN

Vol. 12, Nr. 4/2013 ,   p553..577

Author(s):  
Mo'taz Amin AL-SA'EED


Keywords:   banks of Jordan, audit committee, corporate governance, OECD

Abstract:  

This study aims to determine the extent to whichJordanian banks comply with the principles of Corporate Governance from theviewpoint of the related regulatory bodies. We rely on the corporate governancetopics discussed in the World Bank’s ROSC Report. Sixty postal questionnaireshave been distributed randomly to the Audit Committee Members in JordanianBanks, Control and Governance Department in the Central Bank of Jordan and inthe Jordan Securities Commission (JSC), to empirically explore the extent ofcompliance with the OECD’s Principles of Corporate Governance from the viewpoint of those parties. The response rate was 80% which represents 48 out of 60 questionnaires.  The studyhas found that the Jordanian Banks comply with the OECD Principles of CorporateGovernance, the average score of Audit Committee shows that the Jordanian Banksearned a perfect 5.00 score for both the Role of Stakeholders in CorporateGovernance and Disclosure and Transparency categories, while the lowest scorewas in the Rights of Shareholders category of (3.33). The Average score byCategory of Control and Governance Department in the Central Bank of Jordan hasshown that the banking sector of Jordan is moderately saving the rights ofshareholders and so the Responsibility of the Board (the average is 2.5 and3.00) respectively, the analysis of JSC score has shown an approximate resultsthat obtained from the Central Bank of Jordan departments. This identificationcan be interpreted as showing that the Central Bank of Jordan and JSC responsesare mature and objective, and they are applying the same tools and pillars tocontrol and oversight the banking sector of Jordan. In conclusion, the overallaverage scores of all tested parties are supporting that the banking sector ofJordan is complying with the (OECD) Principles of Corporate Governance. Theresults of the study recommend continued enforcement of the rights ofstockholders in particular and the responsibility of the Board. More emphasisshould be placed on the rights of stockholders and related party transactions.We recommend a high level strategic review of the different functions of theCentral Bank of Jordan and the JSC, so that functional responsibilities can bebetter aligned concerning the Rights of stockholders and Board Responsibilities.These results could be utilized to conduct further analysis regarding theattributes of those tested Audit Committees, the proposed impact of ownershipstructure on compliance with CG, and Equitable Treatment of Shareholders.



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