The impact of foreign ownership on corporate governance: evidence from an emerging market

• Main Authors: Rawan Shubita, Moade Fawzi Shubita
• Format: Article
• Language: English
• Published: LLC "CPC "Business Perspectives" 2019-05-01
• Series: Investment Management & Financial Innovations
• Subjects: corporate governance; emerging markets; firm value; foreign ownership; Jordan; market efficiency
• Online Access: https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/11981/IMFI_2019_02_Shubita.pdf

This research explores the influence of foreign ownership on non-financial public shareholding firms in the Amman Stock Exchange (ASE). The study involved an investigation into the connection between non-Jordanian ownership and the company growth opportunity, stock liquidity, leverage, dividend policy and business output. The results highlight that foreign ownership can provide improved corporate governance practices by playing a decisive role in increasing the growth opportunity and enhancing the firms’ market valuation, as measured by Tobin’s Q. Moreover, the findings indicate that companies with foreign board membership have better operating performance and higher firm value. The rewards were reaped by foreign investors based on their superior monitoring ability, which affects the decisions made and actions taken by management.