Adel Bino

Idiosyncratic Risk and Corporate Governance: Evidence from Jordan

ABSTRACT This article offers evidence in support of the hypothesis that when investors have weak protection, small investors can suffer expropriation by large shareholders. In this kind of situation, a stock’s idiosyncratic risk is found to be negatively related to ownership concentration, which indicates that the cost of controlling ownership may outweigh its benefits. This is consistent with the view that minority investors have less incentive to invest in companies with weak protection for investors. When this is accompanied by low-quality information disclosed to the public, private information is not likely to be reflected in stock prices, resulting in lower idiosyncratic risk.

Trade, Export Capacity, and World Trade Organization Membership: Evidence from Jordan

We investigate the impact that membership in the World Trade Organization (WTO) has on Jordans trade and international competitiveness. The classical gravity model is used to examine the association between membership in the WTO and Jordans trade, imports, and most important, exports, which we use as an indicator of the countrys capacity to compete internationally. We find that when Jordan and its trade partner are both members of the WTO, Jordans trade and its contribution to world exports increase significantly. Results of robust estimation of the gravity model and the other roundness checks further confirm the significant positive association between Jordans membership in the WTO and its trade, exports, and imports.

Corporate Governance and Dividend Policy When Investor Protection Is Weak

We investigate the relationship between firm’s dividend policy and the corporate governance mechanism, measured by firm’s ownership structure, in an emerging market characterized by weak corporate governance system and ineffective law enforcement. Evidence is drawn from non financial corporations over the period 2004-2008 using several econometric models with different specifications that account for firm-specific unobservable variables. We find a significant negative relationship between firm’s dividend payout ratio and its percentage of capital owned by blockholders. This result implies that large shareholders are either expropriating the rights of minority shareholders or that firm’s earnings are being used to finance its future investments. Our results support the first implication as we find that the negative impact of large shareholders’ capital stake on dividend payments is robust and unchanged when firm’s sales growth is controlled for.

ENTREPRENEURSHIP IN JORDAN: REGIONAL ANALYSIS AND ENVISAGED ROLE

The objective of this paper is to examine the issue of entrepreneurship in Jordan. Based on the survey of Jordanian adults (2006 individuals in total) which is carried out by the Global Entrepreneurship Monitor (GEM), it is reported that entrepreneurship in Jordan is lower than might be expected. In addition, while cultural attitudes are favorable, males are much more likely than females to become involved in entrepreneurial activity. Finally, the results indicate that while the density of entrepreneurship at the regional level reflects some significant differences, fear of failure is one of the most significant factors that impact entrepreneurial activity. Jordanian policy-makers should not assume that by promoting entrepreneurship per se, the national economy will achieve strong economic growth, and reduce unemployment levels. Such a well-intentioned policy might lead to nothing but disappointment at the macro level. Unless the quality (and quantity) of entrepreneurship improves, the likely impact of Jordanian entrepreneurship, especially female entrepreneurship, will remain centered around poverty reduction.

BANKS OFFER LOTTERY PRIZES: WHAT ARE THE IMPLICATIONS?

The primary goal of this interdisciplinary paper is to examine whether or not the adoption of depositor-focused marketing tool (Lottery prizes) pays in the Jordanian banking system. The fact that about half of the commercial banks offer lottery (cash) prizes to their customers (depositors), it would be interesting for academics in finance and marketing, bank managers, and bank shareholders, to examine the impact of this marketing policy on the performance of this sector in terms of return on assets and net interest margin. Based on a total of thirteen (13) Jordanian commercial banks and the time period 2002-2012, the results indicate that lottery prizes have a positive and significant impact on the accounting performance of banks. However, this positive impact comes at the expense of bank efficiency. In other words, it is concluded that the extra “cost” incurred by banks that offer cash prizes are “passed on” to their customers in the form of wider net interest margin.