The Division of Ownership and Control in Listed Jordanian Firms - Economic Research Forum (ERF)

The Division of Ownership and Control in Listed Jordanian Firms

Ghada Tayem


Date:
March, 2019

NO.
1298

Length:
25 pages

Topic:
G3. Corporate Finance and Governance
L2. Firm Objectives, Organization, and Behavior

Firms listed on the Amman Stock Exchange (ASE) represent an important part of the economic activity in Jordan with 63.5% of market capitalization to GDP in 2016. However, there is little known about the ownership of Jordanian listed firms. This study is the first to document in details the ownership and control structures of more than 200 firms listed on the ASE. In this study I document the immediate ownership of shareholders who control over 5% of the votes in the sample firms. If principal shareholders are legal entities, I identify their owners, the owners of their owners and so on. Then, percentage control is computed using the weakest link rule to identify the ultimate controller at different cut-offs. If the corporation is identified as closely held I assign it one of the following identities: Family, Foreign, State, Widely Held Financial Institution, Widely Held Corporation and other. The study shows that around one third of listed firms are single firms with virtually no deviation between ownership and control. Single firms are mostly owned by families. The other two thirds of listed firms are group affiliated. In some cases control of group affiliated firms is enhanced by their ultimate controllers by the use of pyramids and cross holdings which leads to a diversion of voting rights and cash flow rights especially at the 5% and 10% levels. The control of group affiliated firms is mostly in the hands of families with some groups controlled by foreigners (mainly from the Saudi Arabia) and the state. Finally, corporate wealth is concentrated among a small number of investors, mostly families.

Ghada Tayem


Project

EVENTS

There are no Events PAST



Related Publications

Working Papers

Price Synchronicity, Inter-Firm Networks, and Business Groups in the Middle East and North Africa

Michael Siemon

Business groups are an essential part of the political economy of almost all capitalist countries. ... read more


Working Papers

On the Determinants of Souverign Wealth Funds’ Investments: Are Arab SWFS Different?

Mohamed El Hedi Arouri, Sabri Boubaker and Wafik Grais

The present study investigates the determinants of Arab sovereign wealth funds' (SWFs) investment decisions. Using ... read more


Working Papers

Institutional Environment and Bank Capital Ratios

Tammuz Alraheb, Christina Nicolas and Amine Tarazi

We investigate the influence of the institutional environment on bank capital levels. Using a sample ... read more