Board Structure And Firm Performance: Evidence From Non-Bank Financial Institutions In Jordan

Abstract

Purpose – This study aims to examine the correlation between the board structure and the performance of Non-Bank Financial Institutions (NBFIs) in the context of Jordan.

Methodology/approach/design – As a result, the researcher constructed a multiple linear regression model to explore the nature of this association, utilizing return on assets (ROA) and Tobin's Q as indicators to assess the performance of listed NBFIs in Jordan over the timeframe spanning from 2017 to 2021.

Findings – The outcomes show a positive relationship between board structure and the performance  of NBFIs in Jordan.

Practical implications – The analytical results support the notion that adopting board structures, particularly those aimed at reducing agency costs, can contribute to improved performance among expanding global companies.

Originality/value – The researcher suggests that regulatory bodies overseeing NBFIs in Jordan should establish stringent criteria for appointing independent board members and consider reducing the frequency of board meetings to mitigate information preparation costs and information asymmetry, ultimately enhancing overall performance.