Internal corporate governance mechanisms, investors’ confidence and stock price fluctuations risk

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Abstract

The primary goal of corporate governance is to create a balance of power-sharing among shareholders, directors, and management to enhance shareholder value and protect the interests of other stakeholders. The main aim of this study is to find out the effect of internal corporate governance in improving the confidence of investors and minimizing stock fluctuations risk. In order to achieve the objectives of the study, a questionnaire has been designed and distributed randomly to 200 traders at the Amman Stock Exchange (ASE). Resolution data were analyzed using the statistical program (Smart PLS), in addition to other statistical methods. The study concluded that there is a significant statistical effect of internal corporate governance mechanisms in improving the confidence of investors and minimizing stock fluctuations risk. Also, the study recommended to maintain the current level of investors’ confidence and to work on developing the legal framework for corporate governance in the light of the proposed development of a conceptual framework, and economic growth.

Keywords: Corporate Governance, Internal Governance Mechanism, Stock Fluctuations Risk, Investors, Board of Directors, Jordan

Authors’ individual contribution: Conceptualization – O.S.S.; Methodology – O.S.S.; Investigation – O.A.A. and O.S.S.; Resources – O.A.A. and O.S.S.; Visualization – O.A.A. and O.S.S.; Writing – Original Draft – O.A.A. and O.S.S.; Writing – Review & Editing – O.A.A. and O.S.S.; Supervision – O.S.S.

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

JEL Classification: G23, G32, G34

Received: 05.11.2020
Accepted: 22.01.2021
Published online: 25.01.2021

How to cite this paper: Al-Ibbini, O. A., & Shaban, O. S. (2021). Internal corporate governance mechanisms, investors’ confidence and stock price fluctuations risk. Journal of Governance & Regulation, 10(1), 22-28. https://doi.org/10.22495/jgrv10i1art2