The Impact of the Culture on Corporate Governance (Board Structure) in Jordan Context

*Houda Qasim Hardan Aleqedat*

## **Abstract**

Corporate governance has become one of the most important issues that concern most investors, shareholders, and decision-makers, as corporate governance has become one of the most important issues that companies are committed to, however, there are still problems related to corporate governance. There is a lack of studies that addressed the relationship between culture and corporate governance particularly, in the Jordan context. The current study covering this issue by investigating the impact of the culture on corporate governance (Board Structure) for the financial sector in Jordan for the period (2013–2018).

The study used the agency theory and Hofstede's cultural dimensions theory as the theoretical framework. The study used different proxies of corporate governance, Board Structure in terms of Board size (BZ), Board independence (BI), and Non- CEO duality (NCEO). To measure the culture the study used the Hofstede cultural dimensions (Power distance index (PDI), Individualism vs. collectivism (IDV), Uncertainty avoidance (UAI), Masculinity vs. femininity (MAS), Longterm orientation vs. short-term orientation (LTO), Indulgence vs. restraint (IND). a multiple regression model has been used to test the developed hypotheses. The findings indicated that there is an impact of culture on corporate governance (Board Structure), this impact is negative and significant. The current study recommends applying managerial implications such as companies should concern with the culture and the local norms when constructing the board or the structure of the company and focusing on the values of the organization since it plays a critical role in shaping the behavior of the individual that affects the culture that could impact the organizational structure, particularly, on the board of directors as the human factor is the essence of culture,. Furthermore, increasing the interest and awareness about the environment when improving company regulations that could help in changing the culture as building a strong culture encourages all employees to perform their roles. In addition, enhancing the corporate governance practices which leads to attracting foreign investors.

**Keywords:** Hofstede cultural dimensions, Board Structure, Board size, Board independence, Non- CEO duality, Financial companies, Jordan context
