Editorial (http://ojs.mediu.edu.my/index.php/ISMJ/article/view/730) Title: The Effect of Corporate Governance on the Financial Performance of Jordanian Corporations Insurance Sector Al-Madinah International University MEDIU (Malaysia) www.mediu.edu.my International Sciences of management journal Volume 2/1439H/2017

1. THE EFFECT OF CORPORATE
GOVERNANCE ON THE FINANCIAL
PERFORMANCE OF JORDANIAN
CORPORATIONS INSURANCE
SECTOR
http://ojs.mediu.edu.my/index.php/ISMJ/article/view/730

2. PAPER OUTLINE
• Abstract
• Introduction
• Literature review
• Material and Methods
• Results and discussion
• Conclusion

3. ABSTRACT
This paper investigates empirically the impact of corporate governance dimensions (Board
Composition, Chief Executive Officer (CEO) Status, and Foreign Ownership) on the performance of
Jordanian insurances companies. The study employs pooled data, and OLS estimation method to
examine empirically the relationship between Jordanian insurances companies performance and
corporate governance dimensions for 27 insurances companies quoted on the ASE. The study
reveals a positive relationship between corporate governance dimensions the number of outside
board members and foreign ownership and Jordanian insurances companies’ performance.
Whereas, the separation of the role of CEO and chair have a negative relationship with
performance. In addition, the study reveals that insurances companies benefit from large size in
offering services. This study is subject to some limitations. First, employing proxies for actual
corporate governance mechanisms and insurances' companies performance outcomes may not
accurately capture the actual mechanisms or outcomes experienced by insurances' companies in
the marketplace. Second, because the implementation of insurances companies’ corporate
governance has started in Jordan from 2010 the study is constrained to the period 2010-2012
financial data.
• Keywords: Corporate Governance, Financial Performance, Insurance

4. INTRODUCTION
• Jordan is one of the developing countries that is affected by economic and
political conditions.
• The researcher investigate the performance effects of corporate governance in
insurance, including, Board Composition, CEO Status and Foreign ownership.
• More specifically, this study attempts to determine:
Relationship between the number of outside board members and Jordanian
insurances’ performance.
Relationship between the separation of the role of CEO and Chairman and
Jordanian insurances’ performance.

5. LITERATURE REVIEW
• Studies of many authors including; Young (2003), labor leader and
Metrick (2003), Cornett et al., (2008), Ravina and Sapienza, (2009),
Cullinan and Sutton (2002), Baysinger and pantryman (1985), Klein
(2002), Larcker et al. (2007), Yermack (1996) Brickley et al., (1997)
Beasley et al. (1999), Yermack (1996) Carpeto et al. (2005) Larcker et
al. (2007), Tang et al., (2000) Bonin et al., (2005) and Claessens et
al.,(2001) have been summarized in literature review section of the
paper.

6. CONT…
• The variables of this study for measurement of financial
performance including Profit Margin, Earnings per share
(EPS), the variety of freelance members in
insurance(NBM) and share of non-Jordanian possession
to total possession in insurance(NJOP).

7. MATERIAL AND METHODS
• A time series data of period 2010-2012 of insurances’ monetary info
and insurances’ company governance info for 27 insurances
corporations quoted on the ASE.
• The study employs the pool sample analysis
• The statistical process for calculation and analysis was based on
the following equations by Multi regression analysis:
BP=α + β3NBMit+β4CEOit+β5NJOPit+e.

8. RESULTS AND DISCUSSION
• 25% of the companies have an equivalent person occupying the 2
posts.
• The bulk of the boards of the sampled insurance companies square
measure freelance.
• The result shows negative and statistically important relationship
between Jordanian insurances companies performance (EPS).
• This study found a positive relation between the proportion of
outsiders (NBM) and performance.

9. CONCLUSION
• The combination of chairperson and CEO help in avoiding
ambiguity in responsibilities in Jordanian insurance company.
• Insurances companies benefit from large size in offering services.
• The study suggest that there may be a need for insurance company
regulation in the area of corporate governance, which would
balance the interests of executives, board of directors and
shareholders.