Do Corporate Governance Indicators Lead the Firm to Adopt High/Low Level of Financial Leverage? Case of Jordan

Abstract

This study aimed to provide evidence of whether or not the corporate governance indicators (CGI) of the Jordanian industrial firms listed at Amman Stock Exchange (ASE) lead the firm to adopt high/low level of financial leverage and to determining which of them have significant effect.  The study population consists of (96) Jordanian industrial firms' governance of the Jordanian firms listed at (ASE). (48) Firms were selected randomly to be used in the study. The study found that, corporate governance indicators do matter in Jordanian industrial firms; ownership concentration and Board size have significant negative relationship with financial leverage, when they increases financial leverage decreases, which means they lead the firm to adopt low level of external debt, while CEO duality and CEO compensation have insignificant positive relationship with financial leverage.