Ownership Structure and Corporate Performance in the Jordanian Manufacturing Companies

This study examines empirically the effects of ownership structure and other explanatory factors on the firm performance for a five year panel of 56 Jordanian manufacturing companies. The results suggest that profitability decreases with high concentration ownership and increases with high portion of equity owned by institutional investors. However, there is no significant relationship between profitability and foreign ownership and management ownership dimensions. The study results document that using different ownership structure dimensions and different profitability measures may justify the different results between ROA and Tobin's Q in this study and in prior studies. Another byproduct objective in this study is to explore the patterns of ownership structure in Jordanian manufacturing companies. The findings show that these companies tend to be concentrated rather than diffused, foreign ownership dimension is nearly constant at moderate level 14% average, institutional ownership dimension is around 28% over the five years (2002 to 2006), and the number of companies in which a general manager is a member on the board of directors is more than 50%.