The Response of The Boards of Directors In the Distressed Jordanian Public Shareholding Companies to The Risk And Repercussions of The Global Financial Crisis

Mohammad Matar, Zaid Nauimat

Abstract


This study aimed at determining to what extent the board of directors in distressed Jordanian public shareholding companies addressed the risks and repercussions caused by the Global Financial Crisis. It also aimed at highlighting the impact of this crisis on their profits and their stock prices. The study consisted of two main sections , the first section was an empirical study done by using content analysis on a sample consisting of (36)distressed companies while the second section was a field study done by using descriptlive analysis on a sample consisting of. (98) person selected from three groups: stockholders , external auditors ,and control vis supervision bodies.The study revealed that (GFC) had significant impact on the performance of companies working in the three main economic sectors.their profits declined for the year 2010 compared with that for the year 2007 as follows: the industrial sector 637% ,the service sector 580% and the financial sector 280%. It also revealed that boards of directors in the distressed companies did not actually response well so as to meet the risk caused by the (GFC). Their actual response to meet those risks were less than that was expected by both the stockholders and the other stakeholders. This created an expectation gap between the two groups amounting 15.7%. So in order to bridge this gap the researchers recommended the need to enforce corporate governance systems and to enhance the role of independent membership in the board of directors.

Keywords


Global Financial Crisis, Distressed Jordanian Public Shareholding Companies, Boards of Directors, Expectation Gap

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