Work

The impact of governance measures on agency cost reduction, legality, and sustainable growth

Year: 2025

Type: article

Abstract: This study investigates the role of governance mechanisms — including the Board of Directors, Audit Committee, Compensation Management, Internal Audit, and External Audit — in reducing agency costs and promoting legality and sustainable growth in industrial companies listed on the Amman Stock Exchange. The study included all 53 listed industrial companies as the research sample. Financial reports and statements from the period 2018 to 2022 were analyzed using statistical methods, with a focus on regression analysis to test the research hypotheses. Previous studies have reported mixed results regarding the relationship between governance mechanisms, agency cost reduction, legality, and financial performance. The findings of this study show clear evidence that governance mechanisms have a significant positive effect on reducing agency costs and supporting sustainable growth. These results highlight the importance of strengthening corporate governance practices to achieve better financial outcomes and ensure legal compliance.

Source: International Journal of ADVANCED AND APPLIED SCIENCES

DOI: 10.21833/ijaas.2025.05.022

Authors: Laith Nasrawin, Abdul Razzak Alshehadeh, Iqbal Jebril, Haneen A. Al-Khawaja, Nasir Albalawee

Institutions: University of Jordan, Al-Zaytoonah University of Jordan, Ajloun National University, Jadara University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Peace, justice, and strong institutions, Decent work and economic growth

Open Access status: gold

Estimated APC paid: $469