Open AccessBoard mechanisms and corporate market value: Panel Data Evidence from Jordan)
Author(s) -
Fawzi A. Al Sawalqa
Publication year - 2021
Publication title -
accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.175
H-Index - 5
eISSN - 2369-7407
pISSN - 2369-7393
DOI - 10.5267/j.ac.2020.12.005
Subject(s) - audit committee , panel data , accounting , value (mathematics) , business , independence (probability theory) , enterprise value , audit , book value , resource dependence theory , ordinary least squares , principal–agent problem , test (biology) , agency (philosophy) , economics , econometrics , corporate governance , statistics , management , finance , mathematics , earnings , paleontology , biology , philosophy , epistemology
The study examines the effect of board size, frequency of board meetings and frequency of audit committee meetings on the market value of 11 Jordanian commercial banks as measured by Tobin’s Q. Random effect panel data regression is employed to test the study hypotheses. Results reveal that board size has a significant and negative effect on bank market value. Results also show that frequency of board meetings has no effect on bank value, while the frequency of audit committee meetings has a significant and positive effect on bank value. The results suggest that the argument of agency theory and resource independence theory towards the role of board and its committees in supporting firm value should be always combined with the appropriate size. Accordingly, one important implication of the study is that the selection of an appropriate number of board members and the prior effective preparation for their meetings are critical factors to enhance the value of banks in Jordan.