Governance Committee Effectiveness and Company Growth: Moderating Role of CEO Ownership

Abstract

The current study utilizes resource dependence theory and the agency theory to investigate whether there is an interaction effects of CEO ownership on the relationship between the characteristics of governance committee and company growth, specifically asset growth. Additionally, this study examines whether the characteristics of governance committee affect asset growth in Jordanian companies. The study sample includes 69 firms listed on the Amman Stock Exchange from 2017 to 2023, with the financial sector excluded, resulting in 483 firm-year observations. A significant negative association between the governance committee size and company growth was found. However, findings also reveal insignificant positive relationships between company growth and both gender diversity and the frequency of governance committee meetings, with an insignificant negative relationship between the independence of the governance committee and company growth. In addition, the study’s outcomes also show that CEO ownership interacts with the size and independence of the governance committee, and leads to improving company growth. Thus, the findings of this study are important for investors, owners, and board of directors, concerning the role of CEO ownership in emerging markets. This study offers empirical evidence and analysis, contributing to the heated debate on good CG practices and mechanisms, such as the effectiveness of the governance committee in a firms that are characterized by high ownership concentration.