NOMINATION AND REMUNERATION COMMITTEE AND FIRM PERFORMANCE: EVIDENCE FROM JORDAN

Abstract

The study examines how the composition of the nomination and remuneration committee (NRC) affects firm performance in Jordanian publicly traded companies. The study consists of 68 non-financial public companies listed on the Amman Stock Exchange for the years between 2017 and 2020. This study uses four different statistical models to analyse the panel data including fixed effects, pooled OLS, random effects, and robust standard errors. The findings show that committee size, overlap, and expertise have a positive association with Tobin's Q. On the other hand, the committee's independence, meetings, and female membership have an insignificant impact on Tobin's Q. Also, the committee's independence and size have a positive and significant effect on ROA, while the committee's expertise, meetings, overlaps, and female membership have no significant effect on ROA. This study contributes to the Jordanian corporate governance structure, including the composition of the nomination and remuneration committees, and contributes to the insights of regulators and shareholders into the role of NRC features in a developing market, such as Jordan, and their impact on firm performance. This study focuses on setting up an NRC for non-financial firms, it is suggested that for certain firms, but not all public corporations in Jordan and other developing countries. Therefore, exploring whether similar findings would be achieved if financial firms were required to establish such a committee would be a topic of interest for researchers.