An overview of corporate governance practices: An institutional perspective in an emerging market

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Abstract

This study provides a comprehensive view of the current practice of corporate governance (CG) in the emerging market, with a specific focus on Jordan. By using archival data, namely the academic literature, reports published by the main institutions, and financial reports published by listed companies, this study addresses the roles explored of main institutional forces, firms’ characteristics, financial markets, and the Jordanian economic environment in reinforcing the current practices of CG in Jordan. Although Jordan aims for institutional development to reinforce practices toward consistency with international CG best practices, the results of this study show that there is a weak institutional environment, with a seeming lack of some external control instruments. The findings also indicate that unpredictable legal enforcement causes poor compliance by Jordanian companies. Therefore, current CG practices in Jordan are neither adequate nor comprehensive (Mansour et al., 2023). Therefore, the weakness of CG may lead to further financial crises at the company level in Jordan. This study represents the first attempt to explore whether institutional forces are essential to strengthen CG practices in developing nations, and the results of this article can serve as a prototype for other developing economies.

Keywords: Jordan, New Institutional Sociology, Corporate Governance

Authors’ individual contribution: Conceptualization — J.M.A.-M., H.A., and M.K.S.; Methodology — J.M.A.-M., A.M.A.M., and L.K.A.; Formal Analysis — H.A. and A.M.A.M.; Investigation — J.M.A.-M., A.M.A.M., and L.K.A.; Resources — J.M.A.-M., M.K.S., and A.M.A.M.; Writing — Original Draft — J.M.A.-M. and H.A.; Writing — Review & Editing — J.M.A.-M. and M.K.S.; Visualization — H.A. and A.M.A.M.; Supervision — J.M.A.-M. and H.A.; Project Administration — J.M.A.-M. and M.K.S.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G38, M48, O16

Received: 21.08.2023
Accepted: 12.02.2024
Published online: 15.02.2024

How to cite this paper: Al-Msiedeen, J. M., Alshurafat, H., Shbeilat, M. K., & Al Maani, A. M., & Alroud, L. K. (2024). An overview of corporate governance practices: An institutional perspective in an emerging market. Corporate Governance and Organizational Behavior Review, 8(1), 191–204. https://doi.org/10.22495/cgobrv8i1p16