THE MEDIATING EFFECT OF THE CAPITAL STRUCTURE ON THE RELATIONSHIP BETWEEN THE BOARD OF DIRECTORS AND THE FIRM PERFORMANCE: EVIDENCE FROM JORDAN
Keywords:
board Size, board independence, board of director, capital structure, firm performanceAbstract
Abstract: This study examines the mediating effect of capital structure on the relationship between the board of directors and the firm performance of listed companies on the Amman Stock Exchange. In this study, we examined the capital structure by total debt to total asset ratio, whereas board size and board independence it was to investigate the influence of the board of directors, while Tobin's Q was used to measure firm performance. Using sample of 72 firms from the industrial and service companies from 2017 to 2021, the findings showed that board size and board independence have a positive and significant effect on firm performance. Meanwhile, the board size has a negative and significant effect on capital structure, while board independence has a positive and significant effect. This study also found the capital structure has a partial mediation effect on the relationship between Board Size and firm performance. The results indicate that the capital structure has no mediation relationship between Board Independence and firm performance. This study shows the empirical evidence to assist executed times, and stakeholders in their decision. Consequently, these findings provide evidence for executives, and regulators in Jordan.
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