International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12

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 Volume 12, Issue 5 (May 2025), Pages: 230-241

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 Original Research Paper

The impact of governance measures on agency cost reduction, legality, and sustainable growth

 Author(s): 

 Laith Nasrawin 1, 2, *, Abdul Razzak Alshehadeh 3, Iqbal Jebril 4, Haneen A. Al-Khawaja 5, Nasir Albalawee 6

 Affiliation(s):

  1School of Law, The University of Jordan, Amman, 11942, Jordan
  2School of Law, Al-Zaytoonah University of Jordan, Amman, Jordan
  3Faculty of Business, Al-Zaytoonah University of Jordan, Amman, Jordan
  4Faculty of Science and Information Technology, Al-Zaytoonah University of Jordan, Amman, Jordan
  5Department of Financial Technology and Banking, Faculty of Business, Ajloun National University, Ajloun, Jordan
  6Department of Law, Faculty of Law, Jadara University, Irbid, Jordan

 Full text

    Full Text - PDF

 * Corresponding Author. 

   Corresponding author's ORCID profile:  https://orcid.org/0000-0002-6937-5324

 Digital Object Identifier (DOI)

  https://doi.org/10.21833/ijaas.2025.05.022

 Abstract

This study investigates the role of governance mechanisms — including the Board of Directors, Audit Committee, Compensation Management, Internal Audit, and External Audit — in reducing agency costs and promoting legality and sustainable growth in industrial companies listed on the Amman Stock Exchange. The study included all 53 listed industrial companies as the research sample. Financial reports and statements from the period 2018 to 2022 were analyzed using statistical methods, with a focus on regression analysis to test the research hypotheses. Previous studies have reported mixed results regarding the relationship between governance mechanisms, agency cost reduction, legality, and financial performance. The findings of this study show clear evidence that governance mechanisms have a significant positive effect on reducing agency costs and supporting sustainable growth. These results highlight the importance of strengthening corporate governance practices to achieve better financial outcomes and ensure legal compliance.

 © 2025 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license ( http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

 Corporate governance, Agency costs, Sustainable growth, Governance mechanisms, Financial performance

 Article history

 Received 29 December 2024, Received in revised form 24 April 2025, Accepted 18 May 2025

 Acknowledgment

This project was financially supported by the Deanship of Scientific Research and Innovation at Al-Zaytoonah University of Jordan. 

  Compliance with ethical standards

  Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Nasrawin L, Alshehadeh AR, Jebril I, Al-Khawaja HA, and Albalawee N (2025). The impact of governance measures on agency cost reduction, legality, and sustainable growth. International Journal of Advanced and Applied Sciences, 12(5): 230-241

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 Figures

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 Tables

  Table 1  Table 2  Table 3  Table 4  Table 5  Table 6 

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