Abstract:

The study aims to measure the impact of corporate governance on reducing the agency costs in the Jordanian industrial public shareholding companies listed at Amman stock exchange, and to achieve this goal, the researchers studied the impact of corporate governance mechanism factors on reducing the agency costs, which can be represented in (Board size, institutional ownership, audit committee, debts ratio, dividends ratio, return on assets (ROA), and firm size). Agency costs were measured by using the following indicators: assets turnover ratio and operating expenses percentage. The study sample consisted of all industrial companies listed in Amman stock exchange, which have data available in this market during the period (2014-2016), and amount to 46 companies. The relationship between the corporate governance and agency costs was tested by relying on the generalized estimating equations (GEE) model, which align with the time period and study variables to test the study hypotheses. Study found a statistically significant positive relationship between the non-distribution of company profits and the agency costs represented in the variable (operating expenses ratio) in both cases of existence and non-existence of control variables in the study model. The results also showed that whenever control variables exist in the study model, there is a statistically significant positive relationship between ROA and the agency costs represented in the (asset turnover ratio) variable. Keywords: Agency Costs, Amman Stock Exchange (ASE), Corporate Governance, Jordanian Industrial Companies, Generalized Estimating Equations (GEE) Model.

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