The Barriers and Challenges of Corporate Governance in Jordanian Companies: An Evaluation of the Reality of Corporate Governance in Jordan

Corporate Governance (CG) Public Shareholding Companies Barriers Challenges Houda Qasim Aleqedat / The Barriers and Challenges of Corporate Governance in JordanianCompanies: An Evaluation of the Reality of Corporate Governance in Jordan / 69 81


INTRODUCTION
This paper purposes to detect and analyze the obstacles and challenges facing the application of CG in Jordanian companies. The qualitative research method was employed by conducting interviews with professional persons (managers, boards of directors) to answers the research questions. In addition, the paper reviewed the articles that addressed the dif iculties in applying the guidelines of CG in Jordan. The data has been collected from these interviews, scienti ic articles summarized the barriers impede implementing a good practice of CG.
The paper concludes that companies still facing weaknesses in the procedures of implementing and commitment to the guidelines of CG. This reason is due to the guidelines of CG are indicative and non-binding as they aim to elevate the management level in companies and keep the privileges of shareholders. Also, the paper concludes a unanimous agreement that CG is a critical feature in business success. However, there are still some restrictions and barriers that impede the progress of good practices of CG. Hence the justi ication for conducting this study to try illing the gap between theory and practice of CG to overcome these barriers, and to attain effective solutions by full implementation of principles of CG which may effects positively on -70 -the knowledge by increasing the awareness of the positive effects of full implementation of principles of CG on the environment of work on the ground. In particular, applying the basics of the guidelines of corporate governance. Whereas, if the guidelines of corporate governance are applied in accordance with international best practices in this regard (theoretical implications and managerial implications), It will provide the best rules, structures, and processes that enhance con idence in the institution, as well as provide justice, responsibility, duties, and lucidity and provide con idence and tranquility to its customers. In other words, the implementation of corporate governance in business organizations is the base for increasing performance and achieving goals. In addition, it stimulates the companies to adherence to the guidelines of professional conduct. As well as inding mechanisms to promote ethical behavior which in turn re lect the commitment with applicable laws that in luencing attitudes of employees. In addition, the current study may serve the researchers as an input for future research.

Problem statement:
Hence the question may arise: Is corporate governance might be effective to meet these challenges by implementing good CG in institutions. The paper seeks to answer the following questions:

Importance of paper
Jordan is distinguished as one of the countries of the Middle East, which has been characterized by political troubles since an era ago. Also, Jordan's economic sector faced many challenges as a result of the inancial crises that ultimately affected the country's economy. companies in Jordan? overcoming these obstacles? on the environment of work. Whereas, if the guidelines of CG are applied in accordance with international best practices in this regard, it will provide the best rules, systems, and procedures that enhance con idence in the institution, also provide justice, responsibility, duties, and lucidity and provide con idence and tranquility to its customers. In other words, CG and its application in business organizations are the basis for developing performance and achieving goals.

Research objective:
This paper is distinguished by shedding light on the problems facing Jordanian companies and the solutions proposed in previous research. As well as clarifying the reasons for continuing these problems and suggest effective solutions for these problems. CG is becoming a vital issue later the inancial breakdowns of global companies, for example, the failure of (Enron and the Arthur-Anderson), which led many investors to invest their money in the companies that characterized by good practices of CG. The literature demonstrated the importance of CG (Al-Juaidi, 2007) shows that the signi icance of CG stems from its role in improving and restoring the con idence of shareholders and investors in companies and the outcomes of its business. This would enhance the investment decision-making process as good CG is a vital input into the process of economic and investment decision-making. (Abdel Ha iz & Abdul Razzaq, 2009) indicate the good CG companies characterized by management that preserving the bene its of society and employees and reaching the highest levels of work effectiveness.

Suggestion effective solutions for the obstacles and challenges facing the implementation of
The literature in Jordan addressed some studies that assessed CG in Jordanian companies.
critical elements that raise its quality. Further, (Khoury, 2003) believes that CG is available in the Jordanian business environment (Legislative framework). However, the researcher indicates that there are areas for implementation.
improving and strengthening the guidelines of CG in Jordan and illing the gaps in their 2. (Bashiti & Rabadi, 2006) evaluate the CG in guidelines of CG on the ground to eliminate 6. (al-Qashi and al-Khatib, 2006) The study shortage in the disclosure and transparency world (Arthur Andersen) and review the And the probability of applying these changes of the (Enron) company, whose led to the failure of the boards to follow to the rules of industrial companies to the CG principles. The in the application is rooted mainly in the the commitment of Jordanian banking and strong and very weak and that the weakness companies committed to the application of professional conduct as it should. Besides, 5. (Yamin and Al-Ramahi, 2016) The study CG in Jordan, the CG was measured by using framework for CG, declaration, and lucidity, similarly treated for Shareholders, keep the stakeholders was applied as the best principles. While the principle of similarly treated for inds the applying of the CG guidelines in Jordanian insurance companies to a medium no-compliance of the boards of directors and 4. (Matar & Noor, 2007)  advanced regulation of the inancial market, concluded that the Jordanian inancial market from shareholding companies preparing a high level of report, and raising the level and periodicity of its reports and communications. Furthermore, the study reveals that CG doesn't fully implement, and the researcher indicates that many companies do not have an audit mechanism be addressed as it is a critical mechanism for CG in future studies.
problems facing Jordanian economic establishments and the function of internal audit to attain the goals of CG. Also, the study CG in Jordanian companies, the study shows institutions. Furthermore, the study indicates interest problem. And no separation between in Shareholding Listed Companies. Also, there 3. (Al-Oqdah & et al., 2009) examined the ownership and management has been achieved oversight institutions in identifying companies problems due to lack of independence. The lack of internal audit in many companies, as well as audit committees. The guidelines of CG a weakness in the implementation of these principles, especially in Jordanian banking is a weakness in the external and internal are dispersed and distributed in more than one law or regulation in inancial legislation that Jordanian companies facing a con lict of (corporate law, banking law, etc.

Problem of corporate governance in Jordan
Jordan has taken an advanced step by issuing codes of CG, as these guidelines were launched on 1/1/2007. It was decided to apply these rules initially through the "commitment or interpretation of non-compliance" approach, to give companies lexibility in implementation and suf icient time to adapt to the requirements of the rules of governance. Consequently, awareness of these rules is strengthened. Despite this, companies are still at the moment required to apply these rules, optionally. Therefore, since Jordan characterized by a lack of governance system as a developing country. Also, it has trouble in foreign direct investment (FDI) (Ra iee and Sarabdeen, 2012). Furthermore, since CG measured the success of economic and re lects the translucency and responsibility. So, Jordan must enhance the tools of CG by obliging the shareholding companies to implement these principles compulsorily.
Regarding the laws and legislations in Jordan, applying those laws.
The following table summarizes the main de icits in the carrying out of the CG principles in Jordanian companies:

CORPORATE GOVERNANCE IN JORDAN
Most of the shareholding companies tend to separate ownership and management currently as the main mechanism of corporate governance. Therefore, owners trying to choose suitable boards that employ they hire competent managers. This issue has become one important mechanism of governance in Jordan. In response to the inancial crises, the government in Jordan issued laws related to CG to support the economic situation. The Securities Depository Centre (SDC) issued the Codes of CG which drawing from (OECD) the Organization for Economic Cooperation and Development Principles of CG and the different lows and its regulations and instructions, namely, Banking Law; companies Law; Securities Law; Law of the profession of legal accounting. These codes namely, Shareholding Companies listed on the Amman Stock Exchange, CG Code for Banks, CG Instructions for Insurance Company, Jordanian CG Code (Private Shareholding Companies, Limited Liability Companies, and Non-Listed Public Shareholding Companies). The key goal of these codes is to regulate the relationship and illustrate the rights, obligations. Despite the troubles of the Middle East, the economy in Jordan trying to overcome these troubles, so the government issued the legislations of CG that mentioned above to rebuild con idence to investors.
-No separation between ownership and management.
-Lack of independence of the oversight institutions.
-Dispersion and distribution of the Principles of corporate governance in more than one law or regulations.  It is notable here that there is a shortage in the literature regarding the problem that arises in Jordan CG, for example (Shanikat, and Abbadi, 2011) evaluates the realism of CG in Jordan by using the ive major principles of CG. The paper concluded that Shareholders are not given some of their basic rights such as their participation in large decision making. Further, they were not treated fairly in practice. He emphasized the existence of disclosure and transparency to a large extent, but in terms of quantity and not qualitative.
(Aladwan and Tahtamouni, 2016) clari ied most of the main regulations that regulate CG in Jordan outmoded and it is necessary for issuing a recent regulation of CG to secure good practices of CG by merging all the codes that oversee CG in integrated one concerning principles of new CG for the Organization for Economic Cooperation and Development in 2015.
Here it worth to assert that the local literature in Jordan emphasized that the implementation of CG policies is a theoretical matter that has not been accurately implemented on the ground and has not been fully implemented such as (Al-Oqdah & et al., 2009) indicate that Jordanian companies facing a con lict of interest problem. (Matar & Noor, 2007;Yamin and Al-Ramahi, 2016) assert that the level of commitment of companies is not strong, and this due to the failure of the boards to follow the rules of professional conduct. At the same line (al-Qashi and al-Khatib, 2006) assert that the main problem with the breakdown of the companies was related to the low of professional ethics which means the problem lies with the ethics of the people applying those laws NOT the laws governing CG in general. it is noticed a con lict between these laws and the CG guidelines. For example, the Companies Law No. (22) or year 1997 allows founders to own 75% of the shares in banks and insurance companies and 50% of the shares in other shareholding companies, and they elect the board directors and the related committees which might lead to competing interests. Furthermore, Article (152 / c) of the Jordanian Companies Law did not stipulate the segregation between the role of the chairman and the general manager, while the principles of CG don't permit combining these two positions (Chairman and an executive position).
The research is designed in a way that aims to ensure access answers to questions of research and to address the research problem ef iciently. Therefore, this paper adopted the theoretical and analytical method, where a scheme has been developed for data collection and analysis, the data derived from books, periodicals, and previous research. The paper compared the articles that addressed the dif iculties and barriers in implementing good CG practices in Jordanian companies seeking to examine the extent of compliance of Jordanian legislation and companies with the principles of CG.
The qualitative research method adopted by conducting interviews with professional persons to obtain different answers to the research questions. The of icial letter has been sent to respondents include academic quali ications, as well as the objectives of the paper and the important topics to be discussed in the interviews.
In Summary, although corporate governance in Jordan played a main function in treating the problems of companies, many companies still suffering from some problems have not addressed. Upon reviewing the literature of CG in Jordan and reviewing some laws and guidelines. It is clear that some lawful problems and obstacles hinder attempts to treat the company's problems and hinder the carrying out of CG principles. Among these obstacles are the absence of segregation between ownership and management, the absence of audit committees, the lack of separation between the chairman and the general manager. Failure to compel companies to issue reports associated to CG in an obligatory manner. Therefore, legislative organizations in Jordan must taking these obstacles and problems into consideration and work to motivate companies to implement all the principles of CG in a mandatory manner to achieving to well-organized CG assists poor CG companies to enhance their performance and attract foreign investors.

RESEARCH METHOD
Literature refers to the leadership and entrepreneurial role of management and indicates the functions and tasks exercised by the management in organizing, planning, controlling and making decisions, which makes them deserve the rights and privileges guaranteed by various laws, which formed the culture of the board directors and the environment which it runs. From here stems the role and signi icance of CG to govern and shape this environment to ensure manage the company without any competing interests and guarantee the privileges of stakeholders, in particular, shareholders control their companies in a limited way, whereas boards of directors turn in a decisive role in management (Aleqedat, 2018). However, (al-Qashi and al-Khatib, 2006) indicates a failure by Jordanian companies to adhere to the execution of all principles of CG, and this shows that stakeholders from higher positions who oppose the ideal implementation of these principles, which contradicts their bene its and gains. For this reason, CG may not be a radical solution to the problems of Jordanian companies. (Khoury, 2003) Asserts that the frame of CG re lects the quality of it and CG and this frame is available in the

RESULTS AND DISCUSSIONS
The data was obtained from reviewed literature: (books, websites, periodicals and previous research); questionnaire; and interviews.
Later, a telephone call con irmed the letter and presented clari ication about the topics to create the irst impression of the pro iciency of the researcher. (40) Companies from different sectors were selected to illing out the questionnaire and (30) interviews were conducted with pro icient persons (managers, the board of directors, employees) to obtain different answers to the research questions. The researcher designed a series of questions twenty sub-questions to conclude the barriers of implementation of effective CG. These questions stem from the two main questions of the study problem which were developed from the literature and codes of principles of CG in Jordan.
To assure the validity of research and to get different sides on the subject of study. The researcher employed the Triangulation as a qualitative research strategy by using different methods to collect data and numerous categories of samples (managers, the board of directors, employees) in different sectors (Industry sector, Service sector, inancial sector). The data were collected from different methods: reviewed literature (books, websites, periodicals, and previous research); questionnaire; and interviews. These collected data have been analyzed regarding the challenges that impede the implementation of CG in Jordan.
Regarding the internal and external validity of a study that reveals the reliability of the results of a study. Internal validity (structure of study), whereas the external validity re lects how the results are applied to the real world. Internal validity, this study establishes the association between the employment of CG and the challenges of companies that examine if the CG principles are applied in agreement with global best practices, and what is if these principles may overcome the challenges facing by companies. The higher the internal validity means the higher trust in the indings. The internal validity of the study becomes when alternative interpretations of the study results are absent. To improve the internal validity of a study, the study conducts a research design that raises the possibility of rejecting the alternative hypotheses. This was achieved through selected the sample randomly in a manner in which they are representative of the population of the study.
External Validity re lects if the indings can be a generalization.in other words, the indings can be applied to other people, situations. To improve the external validity of the study. The study de ined the population in a clear way. In addition, the study conducting with different samples and it gets the same results. Furthermore, the study adopted the meta-analysis by depending on a large number of studies that re lect the same results on the same topic.

Data collection
This paper discussed various aspects of dif iculties in the execution of the good performs of CG. This section will include the most important points on which the articles focused on obstacles in applying CG. As well as the most important answers obtained from the responses through interviews. (Bashiti & Rabadi, 2006) indicates that Jordan has made great strides in drawing up CG policies, but these policies have not been exactly applied on the ground. Where most studies (Bashiti & Rabadi, 2006;Al-Oqdah & et al., 2009;Yamin and Al-Ramahi, 2016) con irm that codes of CG don't fully implement in Jordanian companies, in particular, the existence of audit committee, lack of internal audit, and separation between ownership and management. Further, (Yamin and Al-Ramahi, 2016) reveal that the insurance companies do not apply the rules of professional conduct effectively, as well as not providing the requirements for disclosure and transparency in the published data, and do not treat shareholders equally.
Regarding the answers obtained from the responses through interviews. Most interviewees agreed that CG is a critical issue and measurement of business accomplishment. Also, it is a main tool of strength to ensure there are transparency and responsibility in the work environment. On the other hand, respondents were unanimously agreed that the principles of governance are not fully and effectively implemented in Jordanian companies. Most respondents reported that con licts of interest still exist and the lack of desire of some people to apply CG effectively, because that opposes their interests, and therefore there must be a move from the higher authorities of the state to put a hand on the main reason for the existence of obstacles in the application of these principles. Some respondents indicated that the failure of some companies in the implementation due to the absence of ines and penalties.
Jordanian business environment (Legislative framework) but it requests to develop and strengthening and illing the gaps in their implementation.
Based on the collected data from the reviewed literature and interviews regarding the challenges that impede the execution of CG in Jordan, the It might be expected the origin of existence de iciency in the implementation is rooted mainly in the failure of the boards of directors to adhere to the rules of professional conduct. This could be because of the Jordanian inancial market is becoming more sophisticated (Matar & Noor, 2007). As a result, Jordanian companies still suffering from a con lict of interest problem. And this will be becoming worse due to a weakness in the external and internal oversight institutions in the legislations environment.
The literature illustrates that there are dif iculties confronted the implementing perfectly CG performs in Jordanian companies. As a ground, the excessive struggle now faced in the carrying out of CG is a moral problem (ethics of the people whose applying laws) much more than laws governing CG in general (al-Qashi and al-Khatib, 2006). The Board of Directors has more authority to make decisions during the employment of the governance process, which reduces the authority of the company's creators (Argentino and et al., 2017). This may lead to con licts of interest between them, this con irmed by (Jensen & Meckling, 1976) the owner appoints the manager to manage the company agreeing to their interests, but in practice, the interests of the manager do not always meet the interests of the owner, where the con licts of interest are happening. The paper compared the articles related to the assessment of CG in Jordan, all of them agreed there are various obstacles and dif iculties in the carrying out of implementing good governance performs and the indings gained were very nearby.
The respondents suggested focusing on the reasons for the lack of implementation of principles. Also, forcing the companies to cover this de iciency by issuing strict and binding instructions to implement these principles. The following table 2 summarizes the most important responses of the respondents. and illing the gaps in their implementation. 6. There is a weakness in the external and internal 5. The structure of CG is available in the Jordanian oversight institutions in identifying companies' problems due to the lack of independence of companies law needs to be amended in order these institutions. 7. The principles of CG are dispersed and distributed in more than one law or regulation in inancial legislation (corporate law, banking 9. Most of the companies 'boards of directors are effective implementation of CG in the public In summary, despite the troubles of the Middle East, the economy in Jordan trying to overcome these troubles, where the government issued the legislations of CG to rebuild con idence to investors. The Jordanian government has tried to motivate Jordanian companies to implement CG, since 2007. However, companies are still applying these rules, optionally till the moment as there is no mandatory implementation and there is still a weakness in the procedure of implementing and commitment to the CG codes. There is no general implementation of the concept in its entirety, and the reason is that the rules of CG are indicative and non-binding as they aim to raise the level of management in companies and protect the rights of shareholders. The absence of full implementation in CG principles led to a failure in some economic institutions. The company which apply the tools of governance effectively it can cope with the administration crisis.
General manger The CG principals raise the level of management in companies and protect the rights of shareholders.

Head of internal Audit department
The lack of independence of internal control in most companies affects the quality of reports.

CEO
Most of the Boards of directors consist of non-professional members. Also, the paper concluded that there are various obstacles and dif iculties in the carrying out of implementing good governance performs. the origin of existence this de iciency in the implementation is rooted mainly in the failure of the boards of directors to adhere to the rules of professional conduct this due to that Jordanian inancial market is becoming more sophisticated and this could be caused the con lict of interests in Jordanian companies which becoming worse due to a weakness in the external and internal oversight institutions.
companies for the year 2017 as a motivational step to encourage Jordanian companies to adhere to these codes of CG. The main instructions are to emphasize the necessity to adhere to the formation of the Board of Directors and clarify the tasks and duties of the Board of Directors and the formation of committees emanating from this Council such as the Audit Committee, the Governance Committee, the Nomination and Remuneration Committee, the Risk Management Committee, the meetings of the board of directors, and the most important issue is the necessity of commitment to prepare a CG report.
It is worth noting here that some researchers showed that the legislative environment in Jordan is ready to be a basis for developing good CG procedures, but based on the weaknesses mentioned earlier, there are still shortcomings in implementing the process. Therefore the government must compel companies to apply comprehensive CG to achieve maximum bene it from it and raise the ef iciency of the market. Whereas, CG measured the success of economic and re lects the translucency and responsibility. Further, applying codes of CG in all its aspects on the ground may reduce the manipulation of business results and rebuild trust in these companies. And since Jordan characterized by a lack of governance system as developing countries and it has trouble in foreign direct investment (FDI). Jordan must oblige the shareholding companies to implement the codes of CG compulsorily.
The paper concluded it is agreed that CG is a critical issue and measurement of business accomplishment. Also, it is a main tool of strength to ensure there are transparency and responsibility in the work environment. As well as there is agreed that the principles of governance are not fully and effectively implemented in Jordanian companies on the ground despite the efforts of government by issuing the legislations and the codes of CG to motivate the companies to implement CG, since 2007. Since the rules of CG are indicative and non-binding.
Finally, despite a unanimous agreement that CG is a critical factor in corporate success, there are some restrictions and barriers that hinder the progress of good practices of CG. Therefore, it is necessary to recommend here to adopt this issue in future research by studying how to overcome these barriers, which may positively affect companies.

CONCLUSION
Depending on the objectives of paper that identifying the obstacles and challenges facing the execution of CG in Jordanian companies. The researcher reviewed the literature and compared the articles that addressed the dif iculties in executing the guidelines of CG in Jordan. It was clear that there are no local articles in this regard. Further, the researcher examined the collected data from the interviews, scienti ic articles to clarify the obstacles and challenges that hinder the good application of CG.
Finally, it has been indicated by some authors that the legislative environment in Jordan has a basis for developing good CG procedures but the existence of challenges hinder implementing the good practices of CG. Therefore, the government should compel companies to fully implement the principles of CG and overcome the problems arise from this CG as well as overcome the barriers that hinder the effective application to achieve maximum bene it from it and raise the ef iciency of the market as CG measured the success of economic and re lects the translucency and responsibility and reduce the manipulation of

THE IMPORTANCE OF RESEARCH FOR THE FUTURE
promotions committee, governance committee, In the following, the most important practical implications (recommendations) were concluded from the paper: to fully implementing CG principles such as The paper provides practical implications (recommendations) to ill out the gap between the theoretical and carrying out of CG in Jordan to provide a good and healthy environment and full commitment to the CG codes that is the best solution to overcome the obstacles, which will raise the ef icacy of companies that will return on the economy. separation between the chairman and general audit committees, risk management unit, 2. Spreading the conception of CG further and 1. Urging all public listed companies to commit business results and rebuild trust in these companies.
The paper tried to ill the gap between theoretical and carrying out of CG (what should be applied according to the principles of governance and what is being applied on the ground). The paper recommends the implementation of governance codes on the ground. In particular, applying the basics of CG codes such as separation between ownership and management, forming audit committees, compel companies to issue reports associated with CG in an obligatory manner. Furthermore, this paper recommends intensive efforts that must be directed in the future to conduct research on the problems that arise from CG in the Jordanian context that contribute to highlighting these problems more broadly and clearly. As well as, conducting studies that show and con irm the positive effects of the full implementation of CG policies.
This paper contributes to the knowledge by increasing the consciousness of the conception of CG and classify the obstacles and challenges fronting the execution of CG in Jordanian companies. Furthermore, this paper clarifying the positive effects of the full implementation of codes of CG on the environment of work. The paper suggested effective solutions and stimulate the companies to a commitment to the rules of professional conduct.
As well as inding mechanisms to promote ethical behavior which in turn re lect the commitment with applicable laws that in luencing attitudes of employees. Also, convey the opinions of employees about the governance in different companies in Jordan.

RECOMMENDATIONS AND THEORETICAL IMPLICATIONS AND MANAGERIAL IMPLICATIONS
Recommendations manager, create internal audit departments, and a compliance committee. As an important mechanism to attract investors to reduce the manipulation of business results and restore con idence in the published inancial reports. Finally, we can summarize that the effective implementation of corporate governance in business organizations is the base for evolving performance and achieving goals.
In the light of above, it is necessary for issuing a modern regulation of CG to ensure good practices of CG by merging all the codes that oversee CG in integrated one with regards to principles of newest CG for the Organization for Economic Cooperation and Development. Which leads to positive effects of the full implementation of CG policies that mentioned above and contribute to eliminate the con lict of interest, as well as emphasize on and stimulate the boards to follow the rules of professional conduct.
participate in developing such ethics.
9. Stimulate the companies to a commitment to the governance report.
methods (ethics) of CG and stimulating companies to prepare reports for these ethics.

The necessity of setting and developing
As well as motivating shareholders to Furthermore, directing the efforts to this issue listed companies, and commitment to prepare in future studies.
the rules of professional conduct. As well as inding mechanisms to promote ethical behavior which in turn re lect the commitment with applicable laws.
violation of any code of CG in the laws and the legislations.

Theoretical Implications and Managerial Implications
The term governance means in its general sense good governance and represents the practices by which companies are managed and the ability to control well to run their business. It also leads to a process of balance between the goals of the institution, whether economic or social, with the interests of individuals, then the ef icient use of available resources by providing oversight Sound accounting provides all the data required for accountability on how to manage the resources of this organization. Despite the novelty of this term, the need to apply it in business organizations has become a reality to protect private funds and ensure the safety of these organizations, especially after the widespread inancial and administrative corruption phenomenon in many major companies around the world.
Whereas, if the principles of CG are applied following the international best practices in this regard, it will provide the best rules, systems, and procedures that enhance con idence in the institution, as well as provide justice, responsibility, accountability, and transparency and provide con idence and tranquility to its customers.