Corporate governance and institutional ownership: evidence from Jordan

This paper is one of the first papers to investigate the relationship between ownership structure and corporate governance, namely the factors that determine institutional investors' investment decisions in emerging markets using Jordanian data. A panel data analysis is applied to the dataset which includes non-financial Jordanian firms. The results show that the Jordanian institutional investors conceder firms capital structure, profitability, business risk, asset structure, asset liquidity, growth rates, and firm size when they take their investment decisions. In addition, institutional investors in Jordan prefer to invest in services firms rather than manufacturing firms. Furthermore, the study cannot find any significant relationship between firms' dividend policy and institutional investors. Finally, this paper investigated the factors that affect the probability that institutional investors will control the firm.

This paper has also been given at Corporate Governance research conference held in Birmingham in 2008.