Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


Agency Theory and the Jordanian Corporate Environment: Why A Single Theory is Not Enough

Author(s): Zyad Marashdeh, Zaid Saidat, Dina Alkhodary, Lara Al-Haddad,

This article seeks to determine how useful corporate governance theories are in understanding the business environment in Jordan, and the context of concentrated ownership which exists. As with most developing countries, a majority of firms are controlled by a few shareholders, overwhelmingly families, which has a major impact on company management and operations. This study contends that traditional agency theory is not able to clearly explain many practice of corporate governance as it does not take into account social and cultural issues. A review of several corporate governance theories (agency theory, stewardship theory, stakeholder theory, resource dependency theory and institutional theory) is undertaken in this article analysing how these theories address the impact of governance mechanisms, such as board members, and their social relationships. Whilst each theory, on its own, has different weaknesses, collectively they are able to complement one another.

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