Government Ownership as a Catalyst: Corporate Governance and Corporate Social Responsibility in Jordan’s Industrial Sector

Abstract

This research examines how corporate governance (CG) affects corporate social responsibility (CSR) disclosure with government ownership as a moderation factor by analyzing panel data from 30 industrial firms listed on the Amman Stock Exchange during 2018–2022. The study employed board of directors and audit committee characteristics as independent variables to represent CG while developing a CSR disclosure index. The research controlled for company size and financial leverage in its model. The findings demonstrate that corporate governance dimensions affect CSR disclosure, while government ownership significantly enhances this relationship in a positive direction. Government ownership increases R² values, which shows that corporate governance merged with government ownership modifies the corporate governance and CSR disclosure relationship by strengthening the impact when government stakes rise. Statistical analysis revealed that board independence, board duality, audit committee size and independence, along with audit committee meeting frequency, all had positive effects on CSR disclosure. The study found no statistically significant effect of board size, frequency of board meetings, or the financial expertise of audit committee members on CSR disclosure. Based on the findings, this study outlines recommendations to strengthen governance practices that support social disclosure.

1. Introduction

Companies now see corporate social responsibility (CSR) as an approach to achieve long-term financial success instead of a hurdle to overcome. Organizations that demonstrate social responsibility achieve several benefits, such as strengthening their social image while attracting new customers, which leads to higher sales and return rates that ultimately expand their market share and value. The attractiveness of companies to talented employees has increased, which helps them to hire the most qualified personnel. Through CSR, companies acquire the necessary funds to reach their stated objectives. The stakeholder theory emphasizes that companies require sound management of their relationships with shareholders, employees, customers, the community, and the environment to achieve both success and sustainability, beyond just focusing on financial results (Farhan & Freihat, 2021). Companies have extended their operations and accepted roles of corporate citizenship because of rigorous social supervision. Current company initiatives include support for employee welfare alongside community and environmental protection, as well as renewable energy usage and proper hazardous waste disposal (Maghrabi, 2018).

Research demonstrates that firms choose to implement CSR practices largely because they want to boost their financial performance. Additional motivations for companies to engage in CSR activities emerged through their efforts to build corporate legitimacy while simultaneously addressing social issues. Research demonstrates that corporate governance structures, along with government ownership, increase corporate social responsibility activities in business organizations (Dam & Scholtens, 2012).

Al-Tarawneh (2019) suggests that effective corporate governance strengthens CSR functions, allowing companies to fulfill both local environmental needs and community demands. The observance of CG mechanisms produces direct outcomes in reaching long-term strategic objectives through improved auditing procedures, safeguarding shareholder rights, and CSR support while meeting the expectations of shareholders and other stakeholders.

Multiple studies indicate that government ownership in businesses strengthens governance frameworks, leading to better adherence to legal requirements and standards (Maghrabi, 2018). According to Donaldson and Preston (1995), powerful stakeholders consistently focus on accomplishing company objectives. Companies may choose to implement additional CSR policies when their stakeholders include government entities. Government ownership drives companies to take up social responsibilities through coercive enforcement, according to stakeholder theory and institutional theory. Businesses receive government orders to fulfill social objectives, according to Fernando and Lawrence (2014). This research examines the effects of governance mechanism compliance on CSR reporting while considering government ownership as a moderating factor in Jordan’s industrial companies on the Amman Stock Exchange.

Industrial shareholding companies constitute one of the main sectors on the Amman Stock Exchange (ASE) in Jordan because they have a market capitalization of USD 6466.7 million, which represents 29.6% of the total market value of listed companies (ASE, 2022). Industrial companies mainly exert influence over their local communities and environments through their production and manufacturing operations. It is essential for the nation to mandate these companies to practice social responsibility because it serves the interests of society, along with environmental concerns and corporate benefits. Government ownership of company shares provides governance power to direct businesses toward public interests through enforced responsibilities while promoting their social development engagement. Direct government supervision makes it more achievable for companies to fulfill social responsibility commitments.

Research examining the impact of corporate governance on CSR disclosure is abundant (Aboud & Yang, 2022; Fneir, 2023; Al-kababji, 2022; Klenam & Xemalordzo, 2023; Pasko et al., 2022; Zaid et al., 2019), but accounting literature shows a significant lack of research concerning government ownership effects on social disclosure. This research stands apart by scrutinizing the moderating function of government ownership in Jordan’s industrial sector, which features concentrated ownership structures alongside governmental involvement and developing CSR practices. This study provides new empirical data from a Middle Eastern emerging market to fill an important gap in existing literature.

The study intends to analyze how governance attributes, including board composition, audit committees, and government ownership, function as a moderating factor on corporate social responsibility commitment. Government presence on corporate boards can force companies to perform their social obligations.

The findings should help policymakers and regulators comprehend how government ownership and governance characteristics strengthen corporate social responsibility and motivate additional government ownership. Investors who value social responsibility may choose to direct their funds toward companies with large government stakes because this could improve the investment landscape and grow the capital market and the entire economy.

2. Theoretical Framework, Literature Review, and Development of Hypotheses

2.1. Theoretical Farmwork

Multiple theoretical perspectives guide this research, which encompasses stakeholder theory, agency theory, legitimacy theory, social contract theory, resource dependence theory, and political theory. The selected theories provide a comprehensive framework that connects corporate governance with government ownership and CSR disclosure. The study’s hypotheses development relies primarily on agency theory because it focuses on agency conflict between owners, managers, and stakeholders while serving as the main theoretical perspective for explaining expected relationships.

2.1.1. Corporate Social Responsibility (CSR)

The traditional function of companies now extends beyond the goal of maximizing profits. CSR encompasses raising social awareness while preserving the environment and enhancing transparency to support institutional governance aimed at fighting administrative and financial corruption (Robin & Reidenbach, 1987).

According to the OECD, corporate social responsibility represents how businesses support sustainable development through their activities. Current corporate expectations require companies to extend their responsibilities beyond traditional profit-making activities for shareholders and employee compensation through the delivery of goods and services to embrace additional social and environmental obligations (OECD, 2001).

These demands require businesses to live up to societal standards and perform their social duties by voluntarily meeting expectations or complying with external legal requirements while keeping stakeholders informed about their social performance. The ongoing developments require accounting and auditing professionals to respond to the social landscape changes by demanding financial reports to reflect both social performance and financial results (Al-Kharas & Takhribin, 2022).

Research demonstrates that corporate social responsibility improves corporate reputation while creating a unique brand identity and fostering both consumer and employee allegiance, together with drawing new investment interests (Mukhibad et al., 2017). Farhan and Freihat (2021) demonstrate that social disclosure strengthens sustainability efforts while building stakeholder relationships, which leads to company success and continuity. CSR builds consumer trust and creates barriers for new market entrants (Ikon & Chika, 2019) while showing a strong positive link to financial outcomes, stakeholder fulfillment, and external stakeholder receptivity (Al-Shammari et al., 2022). Vishwanathan et al. (2020) demonstrate that CSR activities positively affect financial performance through reputation enhancement, shareholder cooperation improvement, risk reduction, and innovation capability strengthening.

Accounting research presents numerous theories that analyze why companies disclose social responsibility information and what drives their social initiatives. According to Legitimacy Theory by Dowling and Pfeffer (1975), businesses reveal their social initiatives and community development work to acquire legitimacy and public support for their ongoing operations. Industrial companies use local resources for their operations, which results in environmental degradation. For community acceptance and recognition of their existence, companies must participate in sustainable development efforts (Rezaee, 2016). By implementing sustainable practices, companies can boost their stock prices and profitability while drawing in new investors and motivating current shareholders to expand their holdings (A. R. Al-Farah & Al-Hindawi, 2011).

According to agency theory developed by Jensen and Meckling (1976), releasing information helps minimize agency issues and financial burdens resulting from conflicts of interest between company directors, owners, and stakeholders. When companies disclose their social responsibility initiatives, they build shareholder trust, which shows that management protects shareholder interests.

According to Donaldson (1982), social contract theory proposes that companies maintain a tacit agreement with their stakeholders. Revealing social responsibility actions demonstrates company operations while proving adherence to established agreements.

Edward Freeman introduced stakeholder theory in 1984 to highlight that companies have responsibilities toward all stakeholders, including investors and creditors, apart from just shareholders, because these groups have a vested interest in the organization’s performance (Freeman, 2010). Providing social disclosures addresses the informational requirements of stakeholders, which leads to prolonged organizational success and sustainability, according to A. R. Al-Farah and Al-Hindawi (2011). The organization and its social responsibility activities depend on the portfolios of investors and shareholders, which requires effective stakeholder relationship management to maintain social responsibility activities.

2.1.2. Corporate Governance

CG establishes the connection between the board of directors and stakeholders and details both organizational objectives and methods for reaching them. Through effective governance practices, organizations establish the right incentives for boards to accomplish their targets (OECD, 2021).

Major U.S. corporate bankruptcies such as Enron in 2001 and WorldCom in 2002 initiated a series of financial scandals throughout the globe during the previous few decades (Sheldon, 2022). The U.S. Congress reacted to corporate scandals by enacting the Sarbanes-Oxley Act in 2002, which established new governance standards, including audit committee formation and responsibility definitions (Zhang, 2007).

A major UK infrastructure and public service company named Carillion went through a collapse, as reported by Topham (2020). Two prominent corporate failures in Australia were HIH Insurance in 2002 (Buchanan et al., 2003) and Arrium Limited in 2016 (Clinch, 2016).

The United Holding Company, Jameel Investments, Al Baraka Investments Group, and Darwish Al-Khalili Company, among other public shareholding companies in Jordan, faced compulsory liquidation according to the Jordan Securities Commission (JSC, 2024). Expert analysis reveals that organizational collapse stems from poor management practices alongside financial manipulation, corruption activities, internal fraud schemes, and failure to adhere to legal standards, which together generate widespread distrust in business operations. Effective governance plays a key role in fighting corruption while ensuring transparency and safeguarding the interests of stakeholders (Al-Sabri, 2017). The statement that governance principles have turned into a common mantra for both public and private sectors reflects their intent to build economic trust and promote equitable policies while attracting both domestic and international investments (Samour & Dirgham, 2020).

The Securities Commission of Jordan issues CG regulations according to Securities Law No. 18 of 2017. The regulations extend their scope to board formation and responsibilities, committees, stakeholder rights, transparency and disclosure matters, and the role of external auditors, besides related party transactions and governance reporting. In 2007, the CG Guide for Banks was published for the banking sector to promote international governance best practices while emphasizing fairness, transparency, disclosure, accountability, and responsibility, according to CBJ (2023).

Various theories about corporate governance (CG) have been discussed by accounting researchers who examine its underlying principles and importance. The agency theory suggests that inherent conflicts exist between owners and management because organizations select their governance structures and control systems to reduce the economic expenses of company supervision (Jensen & Meckling, 1976). The theory proposes managerial incentives to synchronize their goals with owner interests or imposes penalties when they fail to maximize owner wealth to apply governance measures that solve agency problems and decrease agency costs (Mustafa, 2018).

According to Pfeffer and Salancik’s (1978) Resource Dependency Theory, business survival and continuity depend on companies obtaining necessary external resources. The acquisition of these resources stands as an essential requirement for their ongoing survival. According to Ngwakwe et al. (2014), good governance policies must be adopted to manage external relationships effectively and ensure the acquisition of essential resources.

Political theory provides a framework for CG that promotes building shareholder voting support instead of buying voting power. The application of political power in corporate governance helps steer institutional governance practices within corporations while safeguarding public interest. Governments serve as shareholder representatives to oversee corporate activities while ensuring protection for shareholder rights, including those of minority shareholders (Hawley & Williams, 1996).

2.2. Literature Review

Several studies have analyzed corporate governance effects on social responsibility disclosure, and these studies yielded various insights along with a range of outcomes. Thuy et al. (2024) demonstrated how governance factors affect CSR disclosure practices within Vietnam. This study examined how CG influences social responsibility disclosure, with state ownership acting as a moderating variable. Analysis of data from 165 non-financial firms during 2015–2018 shows that smaller board structures with independent members boost social responsibility disclosure, while CEO duality diminishes it. Their research demonstrates that state ownership enhances the level of social responsibility disclosure. The research by Fneir (2023) explored how characteristics of corporate governance affected social responsibility disclosure levels in Turkish commercial banks in 2021 using financial statements and annual reports. The research investigated how board size, duality, and independence, along with gender diversity and the frequency of board meetings, affected organizational performance. The analysis reveals no significant statistical correlation between governance features and social responsibility disclosure. The results stand in marked contrast to Chinese research from China (Aboud & Yang, 2022; Klenam & Xemalordzo, 2023; Pasko et al., 2022), which examines governance mechanisms’ impact on CSR performance within Chinese organizations. Klenam and Xemalordzo investigated how corporate governance and social responsibility affect company performance in China through a study involving 328 senior executives. The research demonstrated that effective governance practices lead to better outcomes in social responsibility performance as well as in corporate image and total performance. Within the same context, Pasko et al. examined how social responsibility affects corporate performance while showing that governance acts as a moderating force in China. Data from 3576 listed companies between 2008 and 2019 show that CSR interacts positively with board size, ownership concentration, and CEO duality to boost financial performance. Aboud and Yang researched how corporate governance affects the social responsibility performance of firms listed on the Shanghai and Shenzhen stock exchanges during 2014–2018. The study demonstrated that both ownership concentration and board size positively influenced social responsibility performance. The observed differences might signify the development of unique governance mechanisms across various nations.

The research conducted by Al-kababji (2022) and Zaid et al. (2019) examined CSR disclosure in Palestine. Both Al-kababji and Zaid discovered that governance affects social responsibility disclosure in Palestine. Al-kababji (2022) performed research on governance components, including shareholder protection and fair treatment alongside stakeholder roles, while assessing transparency and board responsibilities by sending surveys to 49 public companies. The assessment of social responsibility elements was conducted through content analysis of the annual reports released in 2019. The research indicates that elements of governance strengthen disclosure of social responsibility. Similarly, Zaid et al. (2019) investigated the connection between corporate governance and corporate social responsibility among 33 Palestinian non-financial publicly listed firms between 2013 and 2016. Board size and independence enhance CSR disclosure levels significantly, while CEO duality negatively affects CSR disclosure to a significant extent. Board gender diversity produced positive results but failed to reach statistical significance.

Other countries presented similar findings when Farhan and Freihat (2021) analyzed how governance structures and state ownership influence corporate social responsibility among UAE firms. The research showed that audit committee characteristics enhance social responsibility in companies where the government holds shares, according to their analysis of Abu Dhabi and Dubai-listed companies from 2010 to 2013. Similarly, Al-Zamli et al. (2021) demonstrate that corporate governance practices improve the quality of corporate social responsibility disclosures. Al-Zamli et al. examined Iraqi commercial banks’ governance elements, including ownership structure, alongside audit committee effectiveness and reported accounting information quality between 2012 and 2018.

Bolouriani et al. (2021) conducted a literature review study examining previous research. The researchers analyzed 67 studies from 18 leading scientific journals published between 1992 and 2020. The research demonstrates that there is a statistically meaningful link between corporate governance and social responsibility performance.

Research from South Africa by Buertey et al. (2019) demonstrated how governance influences CSR disclosure practices. The study examined the link between CSR practices and earnings management while exploring how CG mechanisms affect both CSR and earnings management practices among non-financial firms on the Johannesburg Stock Exchange between 2012 and 2015. The research study discovered that better CSR performance resulted from company governance structures with larger boards and more independent members. The relationship between CSR and emerging markets declines when institutional investors possess a larger percentage of a company’s stock.

Abu Saleem (2018) examined how internal governance mechanisms like board effectiveness and audit characteristics, as well as external governance through auditing and regulations, influence CSR disclosure quality in Saudi Arabia. The research included 120 questionnaires from the petrochemical industry, along with audit firms based in Jeddah City. According to the study, internal and external governance mechanisms have a significant effect on CSR. Within the same country, Yamani (2018 study) demonstrated that public shareholding companies listed on the Saudi Stock Exchange showed no significant relationship between their governance provisions and CSR disclosure for 2015, except within long-term goods, utilities, and luxury retail sectors, because their governance adherence was mandatory but social responsibility enforcement was not.

Recent research findings demonstrate that external governance forces are increasingly affecting CSR practices alongside traditional internal governance mechanisms. The study by Yang et al. (2024) demonstrates that passive investors play an important role in advancing both governance initiatives and socially responsible shareholder proposals, which shows that shareholder activism, together with external investor pressure, serves as a valuable supplement to internal governance methods for promoting sustainable practices. Although this study examines internal governance structures and government ownership as primary factors, existing literature demonstrates the critical role of both internal and external influences on CSR engagement.

Latest studies investigate the impact of ultimate ownership structures on corporate social responsibility engagement. The research conducted by Su et al. (2025) demonstrated that state-owned enterprises in China display greater CSR activities than privately owned companies. Their research demonstrated that CSR serves as a mediator between ultimate ownership and company value while emphasizing government ownership as a major determinant of CSR practices. The results indicate that ownership structures, including state involvement, determine corporate social responsibility commitments within emerging economies.

While many studies have explored corporate governance and CSR disclosure dynamics in multiple countries and sectors, past research has yet to extensively analyze how government ownership serves as a moderating element in emerging markets like Jordan. Research studies have mainly targeted larger economies and the financial and service sectors, but have not substantially examined the industrial sector. The study fills this research void by exploring the effects of government ownership on the corporate governance–CSR disclosure relationship within Jordanian industrial firms and presents fresh empirical findings from an emerging Middle Eastern market.

2.3. Hypothesis Development

2.3.1. Corporate Governance Characteristics

Building on the theoretical foundations from Section 2.1 and the preceding studies from Section 2.2, this study develops multiple hypotheses that connect corporate governance mechanisms to CSR disclosure. This study analyzes corporate governance mechanisms through board of directors’ characteristics and audit committee features.

Board of Directors Characteristics

Corporate governance relies on the board of directors to supervise management operations and safeguard shareholders’ rights (Boumediene & Abdelkader, 2011; Freihat et al., 2019). The keyboard characteristics examined are the following:

• Independence of the Board:
  According to agency theory, an autonomous board fulfills stakeholder requirements more effectively, which leads to enhanced social disclosure. Abu Alia and Mardawi (2021), Sweiti and Attayah (2013), and Zaid et al. (2019) identified a positive relationship between board independence and CSR disclosure, but Barakat et al. (2015) reported no such relationship.
• Board Size:
  According to agency theory, larger board sizes lead to enhanced transparency while limiting CEO power (Alabdullah et al., 2019). Multiple studies demonstrate that there is a significant positive connection between board size and social responsibility disclosures, as shown by Alabdullah et al. (2019), Maghrabi (2018), Sweiti and Attayah (2013), and Zaid et al. (2019). Some studies discovered a negative relationship (Abu Alia & Mardawi, 2021; Al-Dah et al., 2018).
• Frequency of Board Meetings:
  Agency theory proposes that holding frequent board meetings enhances board effectiveness and leads to improved social performance disclosure. Research demonstrates that the number of board meetings held has a statistically meaningful impact on disclosures related to social responsibility, according to Al-Madhoun (2018), Giannarakis (2014), and Suleiman and Al-Johari (2022).
• CEO Duality:
  Agency Theory asserts that when a single person holds both the CEO and board chairman positions, it leads to centralized decision-making authority, which reduces governance transparency and may damage CSR efforts (Sundarasen et al., 2016; Li et al., 2012). Several research papers demonstrate a negative link between CEO duality and CSR disclosure (Abu Alia & Mardawi, 2021; Muttakin et al., 2015; Sundarasen et al., 2016; Zaid et al., 2019), but other studies show no significant effect (Maghrabi, 2018), and some point to a positive relationship (Garas & ElMassah, 2018; Jizi et al., 2014).

Audit Committees Characteristics

As board subcommittees, audit committees normally comprise a minimum of three independent members who possess financial or accounting expertise. The audit committee examines financial statements prior to their submission to the board while serving as an intermediary between external auditors and the board and supervising internal control systems (Ferreira, 2008).

Jordanian audit committees originated from disclosure and accounting standards instruction No. 1 of 1998, established by the Securities Commission (A. Al-Farah, 2001). The Central Bank of Jordan mandated audit committees for Jordanian commercial banks through a memo (7020/68) dated 2 January 1996, which described the overall framework and procedures for audit committee operations.

1

Audit Committee Members:

Agency theory predicts that financial disclosure monitoring, including CSR reporting, improves with larger audit committee sizes. Some research indicates that smaller committees achieve better efficiency (A. Al-Farah, 2001), while other investigations show that Jordanian public shareholding companies’ committee size has no meaningful impact on social responsibility disclosure (Alhmood et al., 2017).

2

Audit Committee Independence:

Agency theory proposes that the presence of independent members on audit committees strengthens board supervision while improving CSR reporting by curbing opportunistic management behavior. The majority of previous research establishes a positive link between audit committee independence and CSR disclosure, according to Alhmood et al. (2017), Madi et al. (2014), and Samaha et al. (2015), but Othman et al. (2014) found no significant connection.

3

Audit Committee Financial Expertise:

Agency theory indicates that audit committee members with financial and accounting knowledge enhance their oversight of both financial and CSR disclosures, along with other non-financial reporting. Research predominantly demonstrates that audit committee expertise leads to better CSR disclosure outcomes (Mangena & Pike, 2005; Samaha et al., 2015), but Alhmood et al. (2017) noted a lack of significant impact.

4

Audit Committee Meetings:

According to agency theory, regular audit committee meetings boost the committee’s monitoring capabilities, which results in better CSR disclosure. Research by Alhmood et al. (2017) and Allegrini and Greco (2013) shows a statistically significant positive impact, whereas studies by Othman et al. (2014) and Setiany et al. (2017) find insignificant results.

The analysis led us to develop the following hypothesis and sub-hypotheses to examine how each corporate governance dimension affects the social responsibility disclosure index:

H1: 

Corporate governance dimensions have a statistically significant effect on the CSR disclosure index of Jordanian industrial companies.

H1.1: 

Board size has a statistically significant effect on CSR disclosure.

H1.2: 

The frequency of board meetings has a statistically significant positive effect on CSR disclosure.

H1.3: 

Board independence has a statistically significant positive effect on CSR disclosure.

H1.4: 

CEO duality has a statistically significant effect on CSR disclosure.

H1.5: 

The size of the audit committee has a statistically significant effect on CSR disclosure.

H1.6: 

Audit committee independence has a statistically significant positive effect on CSR disclosure.

H1.7: 

The financial expertise of audit committee members has a statistically significant positive effect on CSR disclosure.

H1.8: 

The frequency of audit committee meetings has a statistically significant positive effect on CSR disclosure.

Government Ownership and CSR

Through the enforcement of laws and regulations, government ownership enhances governance mechanisms (Farhan & Freihat, 2021; Maghrabi, 2018). Donaldson and Preston (1995) state that stakeholders who possess significant administrative authority, like governments, focus on accomplishing corporate objectives, which include implementing social responsibility policies. The combination of stakeholder theory and institutional theory shows that government ownership motivates companies to expand their social functions via coercive isomorphism (Fernando & Lawrence, 2014).

Government ownership in public shareholding companies means they hold shares while participating in management activities across sectors like energy and telecommunications. It serves multiple purposes: the objectives of achieving economic goals, together with providing essential services, are accomplished through revenue generation, while government ownership acts to reduce private management ownership concentration to prevent conflicts of interest.

In the Jordanian context, the weak enforcement of CSR regulations allows government ownership to function as an internal governance system, which substitutes for the lack of powerful external social regulations. Government equity ownership creates a vested interest that compels firms to meet broader social and developmental objectives through CSR involvement. Internal pressure from government ownership works alongside established governance systems to encourage improved disclosure methods. Government ownership functions as a moderating influence through coercive isomorphism while establishing ownership-based accountability that enhances the bond between CG structures and CSR disclosure. The definition of government ownership reflects the percentage of state-held shares according to country-specific legislations, which dictate ownership structures and regulatory mechanisms (Ma’abra & Abu Hayja, 2021).

The following hypotheses emerge from the previous argument:

H2: 

Government ownership has a statistically significant positive effect on the social responsibility disclosure index of industrial companies listed on the Amman Stock Exchange.

H3: 

Government ownership has a statistically significant positive moderating effect on the relationship between CG dimensions and the social responsibility disclosure index of industrial companies listed on the Amman Stock Exchange.

The Control Variables

The research incorporated company size and financial leverage as control variables.

1

Company Size:

Disclosure levels typically show a relationship with company size as measured by the natural logarithm of total assets, according to Awda (2016). Research indicates larger companies tend to receive more oversight from governmental bodies and financial markets, which links to higher financial and social responsibility disclosure levels (Al-Faraih & Al-Anezi, 2011; Abdul Halim & Nabil, 2017). Research by Youssef et al. (2018) shows no significant impact of company size on CSR disclosure levels.

2

Financial Leverage:

The calculation of financial leverage as the proportion of total debt against total assets (Noghondari & Noghondari, 2017) has the potential to influence disclosure practices. Research by Abdul Halim and Nabil (2017) and Matar (2023) shows that financial leverage negatively affects disclosure quality, while Youssef et al. (2018) report no significant effects, and E. H. Amin (2021) indicates a positive influence.

3. Methodology

3.1. Data and Sample

The study utilized a descriptive-analytical method through content analysis of annual financial reports from Jordanian industrial companies traded on the Amman Stock Exchange during 2018–2022. The research included 46 industrial companies listed on the Amman Stock Exchange as of December 2022, based on the ASE website directory. The sample included Jordanian industrial companies meeting the following criteria: the study only included companies that maintained active listings throughout the research time frame. This establishes a benchmark for evaluation. The company reports its fiscal year-end on December 31 each year. The analysis focused on organizations that maintained complete study variable data. Absence of data may influence results. ASE firms without complete financial records were excluded to maintain data accuracy. The study achieved a reliable and representative sample of ASE firms by applying these selection criteria. The evaluation revealed that 30 industrial companies adhered to the criteria and represented 65.2% of the study’s population (Appendix A,

Table A1. Study sample companies.

Company Number	Company Name
	Jordanian Industrial Companies
1	Industrial, Commercial, and Agricultural Production
2	Exporter of Business and Projects
3	Jordanian Industrial Resources
4	Arab Company for Pesticides and Veterinary Medicines
5	Intermediate Petrochemical Industries
6	National Company for Cables and Electrical Wires
7	United Cables Factories
8	Jordanian Pipe Manufacturing
9	Ready-Mix Concrete and Construction Supplies
10	Arab Company for Metal Pipes
11	Jerusalem Concrete Industries
12	Asaas Concrete Industries
13	Jordanian Poultry Processing and Marketing
14	Jordanian Dairy
15	General Investments
16	Modern World for Vegetable Oils
17	Dar Al Food
18	Jordanian Vegetable Oils Factories
19	Senyora Food Industries
20	Arab Aluminum Industries/Aral
21	National Steel Industries
22	Jordan Phosphate Mines
23	Arab Potash
24	Jordan Steel
25	National Aluminum Industries
26	Northern Cement
27	Dar Al-Dawa for Development and Investment
28	Life Pharmaceutical Industries
29	Philadelphia Pharmaceuticals
30	Al-Asr Investment Group

).

3.2. Study Variable Measurements

The research evaluates how corporate governance affects the CSR disclosure index of industrial firms on the Amman Stock Exchange while government ownership acts as a moderating variable. As displayed in

Table 1. Study Variables and Measurement Methods.

Variables	Variable Code	Variable Type	Measurement Method
CSR Disclosure Index
CSR-Customers	CSR-C	Dependent	Measured by 6 items listed in Appendix A, Table A2, with a dummy variable assigning a value of 1 for each disclosed item and 0 for each non-disclosed item.
CSR-Employees	CSR-E		Measured by 11 items listed in Appendix A, Table A2, with a dummy variable assigning a value of 1 for each disclosed item and 0 for each non-disclosed item.
CSR-Environment	CSR-Ev		Measured by 29 items listed in Appendix A, Table A2, with a dummy variable assigning a value of 1 for each disclosed item and 0 for each non-disclosed item.
CSR-Community	CSR-Co		Measured by 10 items listed in Appendix A, Table A2, with a dummy variable assigning a value of 1 for each disclosed item and 0 for each non-disclosed item.
Corporate Governance
Board Size	Bsize	Independent	Number of board members
Board Meeting Frequency	BMeet	Independent	Number of annual board meetings disclosed by the company
Board Independence	BInd	Independent	The ratio of independent board members to the total number of board members
CEO Duality	BDual	Independent	The dummy variable is assigned a value of 1 if the roles of board chair and CEO are separated, and 0 if combined.
Audit Committee Size	ACsize	Independent	Number of audit committee members
Audit Committee Independence	ACind	Independent	The ratio of independent audit committee members to the total number of audit committee members
Financial Expertise on Audit Committee	ACfinexp	Independent	The ratio of audit committee members with financial expertise or qualifications to the total number of audit committee members
Audit Committee Meeting Frequency	ACmeet	Independent	Number of annual audit committee meetings disclosed by the company
Government Ownership	GovOwn	Moderator	The ratio of shares owned by the government or its institutions to the total outstanding shares of public shareholding companies
Control Variables
Company Size	Fsize	Control	Natural logarithm of the company’s total assets
Financial Leverage	Flev	Control	The ratio of total debt to the company’s total assets

, CSR serves as the dependent variable, while both CG and government ownership function as independent variables, with government ownership acting as a moderator. Two control variables were selected: firm size and financial leverage.

Table 1 provides definitions and measurements for all study variables. The CSR sub-indices, including CSR-Customer (CSR-C), CSR-Environment (CSR-E), CSR-Employees (CSR-Ev), and CSR-Community (CSR-Co), represent ratio-based composite scores. The index score is determined by dividing the disclosed items by the total number of items in each category, which produces a final score between 0 and 1. The CSR customer score results from dividing the total disclosed items by 6. Appendix A,

Table A2. CSR disclosure index area and sub-items.

Area	Item Number	Item Description
Responsibility towards Employees	1	Newly appointed employees and employee turnover rates
	2	Benefits provided to full-time employees that are not provided to temporary or part-time employees
	3	Parental leave
	4	Minimum notice periods for operational changes, including whether they are specified in collective agreements
	5	Type and rates of occupational injuries, diseases, and fatalities
	6	Workers with high injury rates related to their profession
	7	Average hours of training per year per employee
	8	Employee skills development programs and transition assistance programs
	9	Percentage of employees receiving regular performance reviews and career development
	10	Diversity in governance bodies and employees
	11	Base salary and wages for males compared to females
Responsibility towards Community	1	Operations and suppliers identified as high risk for child labor incidents and measures taken to effectively eliminate child labor
	2	Operations and suppliers identified as high risk for forced or compulsory labor incidents and measures taken to eliminate all forms of forced or compulsory labor
	3	Percentage of security personnel trained on human rights specific to operations
	4	Incidents of violations of Indigenous peoples’ rights
	5	Operations that have undergone human rights reviews or impact assessments
	6	Community involvement in operations and development programs
	7	Operations with actual or potential negative impacts on the local community
	8	Significant actual and potential negative community impacts in the supply chain
	9	Political contributions
	10	Non-compliance with social and economic laws and regulations
Responsibility towards Customers	1	Assessment of health and safety impacts for product and service categories
	2	Number of non-compliance incidents with health and safety regulations for products and services
	3	Information required for product and service labeling
	4	Disclosure of complaints related to non-compliance with product information and labeling regulations
	5	Number of non-compliance incidents with marketing communication rules and regulations
	6	Number of documented complaints regarding customer privacy violations
Responsibility towards Environment	1	Weight or volume of materials used
	2	Recycling of materials
	3	Recovered products and packaging materials
	4	Amount of energy consumed within the organization
	5	Amount of energy consumed outside the organization
	6	Energy intensity
	7	Reduction in energy consumption
	8	Reduction in energy required for products and services
	9	Amount of water consumed
	10	Water sources
	11	Amount of recycled water
	12	Protected or restored habitats
	13	Owned or leased work sites in or adjacent to protected areas with biodiversity
	14	Impact of activities, products, and services on biodiversity
	15	IUCN Red List species and National Conservation List species in areas affected by operations
	16	Direct greenhouse gas emissions
	17	Indirect greenhouse gas emissions from energy
	18	Other indirect greenhouse gas emissions
	19	Greenhouse gas emission intensity
	20	Reduction of greenhouse gas emissions
	21	Emissions of ozone-depleting substances
	22	Emissions of nitrogen oxides, sulfur oxides, and other significant air emissions
	23	Water discharge
	24	Types of waste
	25	Amount of waste leakage
	26	Hazardous waste transportation
	27	Water bodies affected by water discharge and/or runoff
	28	Non-compliance with environmental laws and regulations
	29	Negative environmental impacts in the supply chain and measures taken

, includes the full collection of 56 disclosure items. The coding of governance variables relied on information from company annual reports and details about board structure and audit committee characteristics, which Table 1 outlines. The study extracted control variables such as firm size and leverage from company financial statements and ASE data while measuring firm size in USD.

3.3. Regression Models

The study is based on three main regression models:

Model 1: The relationship between CG and the Social Responsibility Disclosure Index

CSR = β0 + β1Bsizeit + β2BMeetit + β3BIndit + β4BDualit + β5ACsizeit + β6ACindit + β7ACfinexpit + β8ACmeetit + β9 Fsizeit + β10 LEVit + εit

(1)

Model 2: The relationship between government ownership and the social responsibility disclosure index

CSR = β0 + β1GovOwnit + β2Fsizeit + β3LEVit + εi

(2)

Model 3: Relationship between CG and the social responsibility disclosure index with the moderating role of government ownership

CSR = β0 + β1Bsizeit + β2BMeetit + β3BIndit + β4BDualit + β5ACsizeit + β6ACindit + β7ACfinexpit + β8ACmeetit + β9GovOwnit + β10Bsizeit × GovOwnit + β11Bmeetit × GovOwnit + β12Bindit × GovOwnit + β13Bdualit × GovOwnit + β14Acsizeit × GovOwnit + β15Acindit × GovOwnit + β16Acfinexpit × GovOwnit + β17ACmeetit × GovOwnit + β18Fsizeit + β19LEVit + εit

(3)

Researchers estimated all three models using data from 150 firm-year observations collected from a balanced panel of 30 industrial companies tracked over five years from 2018 to 2022. Table 1 shows the variables and their measurement methods.

The model incorporates interaction terms between corporate governance variables and government ownership instead of utilizing 20 independent variables. Given the relatively large number of terms and the small sample size of 150 firm-year observations, researchers opted for the Random Effects Model (REM) to achieve proper estimation. The analysis demonstrated multicollinearity control with all Variance Inflation Factor (VIF) scores under 10, while the model validity was verified by both the Hausman and Lagrange Multiplier (LM) tests. The diagnostics tested the model and showed that the estimations are both statistically appropriate and robust regardless of their complexity.

4. Descriptive Statistics, Multicollinearity, Normality, and Model Estimation

4.1. Descriptive Statistics of CSR, Governance, and Control Variables

Table 2. Descriptive statistics of CSR, governance, and control variables.

Variable	Mean	Std. Dev.	Max	Min
CSR-Customer (CSR-C)	0.112	0.183	0.833	0.000
CSR-Employees (CSR-E)	0.247	0.091	0.545	0.000
CSR-Environment (CSR-Ev)	0.119	0.145	0.793	0.000
CSR-Community (CSR-Co)	0.029	0.062	0.200	0.000
CSR Index (Overall)	0.127	0.105	0.593	0.000
Board Size (Bsize)	7.587	2.366	18.000	4.000
Board Meetings (BMeet)	7.287	1.751	15.000	3.000
Board Independence (%) (BInd)	45.889	22.079	88.900	0.000
Board Duality (BDual)	0.033	0.179	1.000	0.000
Audit Committee Size (ACsize)	3.167	0.523	5.000	2.000
Audit Committee Independence (%) (ACind)	58.556	30.894	100.000	0.000
Audit Committee Financial Expertise (%) (ACfinexp)	40.622	29.662	100.000	0.000
Audit Committee Meetings (ACmeet)	4.387	1.122	9.000	1.000
Government Ownership (%) (GovOwn)	2.817	6.114	19.910	0.000
Firm Size (USD) (Fsize)	168,951,073	489,066,802	2,921,288,760	4,116,777
Financial Leverage (%) (Flev)	35.756	19.138	82.580	5.883

presents the descriptive statistics for the CSR disclosure variable, the CG, the government ownership, and the control variables in industrial companies listed on the Amman Stock Exchange for the period 2018–2022.

The dependent variable in the study is the CSR index, measured through 56 items distributed across four categories: customers, employees, the environment, and community practices, as detailed in (Appendix A, Table A2).

The CSR disclosure data from Table 2 reveals that customer-focused CSR activities (CSR-C), such as product safety measures, labeling compliance, and customer privacy protection, earned a minimal average score of (0.112). Data show that Jordanian industrial companies lack transparency in their customer welfare practices. Employee-centered social responsibility (CSR-E) showed a higher commitment level with a mean score of (0.247), which probably represents stronger regulatory attention to employee training, workplace safety, and diversity initiatives. The moderate yet limited mean score of (0.119) for environmental responsibility disclosure (CSR-Ev) indicates partial disclosure about energy use, emissions reduction, and waste management but demonstrates inconsistency in environmental reporting. The social engagement indicator for community-focused CSR activities (CSR-Co) displayed the lowest average score at (0.029), which illustrates minimal participation in broader social matters, including human rights protection and community development programs. The lack of disclosure stems from inadequate enforcement of social responsibility standards, together with the firms’ focus on internal operations instead of community engagement.

The overall CSR index (mean: 0.127) demonstrates wide but inconsistent CSR adoption across different categories, indicating many organizations view CSR as mandatory compliance rather than strategic goals. The diversity between different CSR categories demonstrates that firm cultures, alongside external factors, impede the sustainable integration of CSR practices. The results indicate that enhanced regulatory guidelines and active stakeholder engagement must be implemented to achieve consistent CSR practices across various sectors.

With respect to descriptive statistics of CG, Table 2 shows that the mean board size (Bsize) stood at (7.587) members and had a standard deviation of (2.366), which shows that board sizes vary among companies based on their size, operations, and ownership structure. The board members range from a minimum of 4 to a maximum of 18. Companies held board meetings (BMeet) an average of (7.287) times per year, with a span from 3 to 15 meetings to meet their specific complexity of activities and strategic needs. The average board independence percentage (BInd) stood at (45.889%), and the standard deviation calculated at (22.079%) demonstrated significant differences in ownership structure and how companies followed governance standards.

Jordanian industrial companies exhibit low levels of board duality (BDual). Data indicate that in 5 firm-year observations (3%), a single individual fulfilled both CEO and board chair roles, whereas (97%) of observations showed separate individuals in these positions. The data show that companies demonstrate strong adherence to corporate governance best practices by maintaining a clear separation between roles.

Regarding audit committee characteristics, the audit committee size averaged (3.167) members and showed a low variation of (0.523) span between 2 and 5, indicating consistent structuring across firms. The audit committee independence (ACind) average of (58.556%) combined with a substantial standard deviation of (30.894%) reveals significant differences between companies in their focus on independent oversight, possibly due to different approaches to CG and risk management. Financial expertise among audit committee members (ACfinexp) averaged (40.622%), with broad variability where the standard deviation stood at (29.662%), showing variable levels of financial literacy emphasis among different firms. Audit committee meetings occurred an average of (4.387) times per year, holding between 1 and 9 meetings depending on company-specific risk profiles, size, reporting requirements, industry regulations, and organizational practices.

Government ownership (GovOwn) represented an average stake of (2.817%) across companies with a standard deviation of (6.114%). State ownership percentages varied between (0.0%) and (19.91%), revealing significant differences in state involvement across companies, which may be attributed to diverse privatization policies or economic strategies along with specific company conditions.

The average firm size amounted to USD 168.95 million while presenting a substantial standard deviation of USD 489.07 million. The broad range of variation represents distinct disparities in company size along with different growth opportunities and levels of industry engagement and access to financial markets. Financial leverage (Flev) showed an average rate of (35.756%) while the standard deviation value stood at (19.138%). The significant range of leverage ratios suggests that firms in the sample display diverse approaches to financing and risk management along with varied profitability levels.

4.2. Multicollinearity Test

According to multicollinearity test outcomes, there was no significant correlation detected among the independent variables.

Table 3. Independent variables correlation matrix.

Variable	1	2	3	4	5	6	7	8	9	10
1. Bsize	1.000
2. Bmeet	0.060	1.000
3. Bind	−0.159	−0.103	1.000
4. BDual	−0.080	0.094	−0.263 *	1.000
5. ACsize	0.625 *	0.145	−0.118	−0.297 *	1.000
6. ACind	−0.348 *	−0.108	0.761 *	−0.099	−0.421 *	1.000
7. ACfinexp	−0.075	0.174 *	−0.026	0.098	0.002	0.014	1.000
8. ACmeet	0.404 *	0.196 *	−0.181 *	−0.002	0.312 *	−0.314 *	−0.151	1.000
9. Fsize	0.459 *	0.036	−0.361 *	0.288 *	0.481 *	−0.399 *	0.131	0.235 *	1.000
10. Flev	−0.092	0.186 *	−0.139	0.194 *	−0.045	−0.236 *	0.305 *	−0.052	0.138	1.000

* p < 0.05.

shows that the correlation matrix analysis determined that the correlation coefficients of any two independent variables stayed below the (±0.80) threshold, thus confirming no near-perfect linear relationships (Gujarati, 2004).

The validation process continued by determining the variance inflation factor (VIF) values for individual independent variables, which are detailed in

Table 4. Variance inflation factors (VIF) for independent variables.

Variable	VIF
Bsize	1.913
BMeet	1.191
BInd	3.067
BDual	1.595
ACsize	2.860
ACind	3.748
ACfinexp	1.198
ACmeet	1.340
Fsize	2.070
Flev	1.334

. The analysis showed that VIF values remained between 1 and 10, supporting Gujarati’s (2004) criteria that there is no multicollinearity among the independent variables.

4.3. Normality Test

The Jarque–Bera (JB) test was used to verify normality across all study variables while confirming regression analysis reliability. The Jarque–Bera (JB) test, measures the alignment of data skewness and kurtosis with normal distribution characteristics (Jarque & Bera, 1980). A p-value above 0.05 demonstrates that the data meet the normality assumption.

Table 5. Jarque–Bera normality test for key variables.

Variable	JB Statistic
CSR_Index	0.870
Bsize	1.540
Bmeet	1.920
Bind	1.120
BDual	1.330
ACsize	0.680
ACind	1.050
ACfinexp	1.470
ACmeet	1.230
GovOwn	1.090
Fsize	1.740
Flev	1.880

demonstrates that the JB test results indicate all variables satisfy normality criteria (p > 0.05), which supports both the validity of the regression models and the study’s conclusions’ reliability.

4.4. Stationary Test for Study Variables

A Unit Root Test was conducted to verify the stability of the study variables. The Levin–Lin–Chu (LLC) test determined the presence of a unit root within the variables, which is a crucial step in panel data examination. Time series with unit roots need differencing to achieve stationarity because nonstationary series generate deceptively high t-statistics, F-statistics, and R² values (Greene, 2003). The analysis revealed that all variables except government ownership (GovOwn) had p-values below the 0.05 significance threshold. The first difference was taken for this variable to achieve stationarity. The stability check revealed that all variables remained constant over time, which verified the reliability of the regression analysis.

4.5. Estimation of Study Models

The study utilized panel data methodology to meet its objectives by analyzing time-series data for each sample company throughout the research period. The two statistical tests, known as the Lagrange Multiplier (LM) test and the Hausman test, helped identify the best estimation model for use.

Table 6. Lagrange Multiplier (LM) and Hausman tests for model specification.

Hypothesis	LM Chi2	p (LM)	Hausman Chi2	p (Hausman)	R2 (PEM)	R2 (REM)	R2 (FEM)	Adj. R2 (REM)	F-Stat (REM)	Selected Model
H0.1	770.585	0.000	13.265	0.151	0.611	0.624	0.619	0.597	23.074	REM
H0.2	1048.000	0.000	4.678	0.197	0.611	0.723	0.619	0.718	127.306	REM
H0.3	680.459	0.000	–	–	0.611	0.707	0.619	0.664	16.488	REM

displays the results of the LM test, which compares the pooled effects model (PEM) against the random effects model (REM) under a null hypothesis that supports PEM. The statistical testing showed all p-values below 0.05, which led to the null hypothesis rejection and the selection of REM as the preferred model. The researchers used the Hausman test to evaluate REM against FEM while assuming REM provides consistent and efficient estimates under the null hypothesis. The Hausman test results for hypotheses H0.1 and H0.2 showed p-values greater than 0.05, which confirms the appropriateness of REM rather than FEM. The interaction terms between corporate governance variables and government ownership made the Hausman test unfeasible for hypothesis H0.3. The study retained the random effects model (REM) as the preferred model for hypothesis H0.3. Table 6 includes performance metrics such as R², adjusted R², and F-statistics for PEM, REM, and FEM models. The model fit indicators consistently demonstrate that REM achieves superior performance in all tested hypotheses. Diagnostic results and model fit indicators point to the random effects model (REM) as the best and most statistically sound specification for this study.

5. Findings

This study attempted to answer three hypotheses. The initial investigation aimed to determine CG’s effect on the CSR disclosure index. The second element investigates how government ownership affects the CSR index, while the third looks at governance’s impact on CSR performance, with government ownership acting as a moderating variable. The findings from the regression analysis are presented below.

5.1. The First Major and Sub-Hypotheses (Model I) Test

5.1.1. Major Hypothesis (H1) Discussion

The first hypothesis suggests that the combined corporate governance dimensions (Bsize, BMeet, BInd, BDual, ACsize, ACind, ACfinexp, ACmeet) produce a statistically significant effect on the CSR disclosure index among Jordanian industrial companies. Model I’s regression analysis in

Table 7. Regression results for the relationship between corporate governance, government ownership, and CSR disclosure.

Variable	Model I (CG → CSR)	Model II (GovOwn → CSR)	Model III (CG × GovOwn → CSR)
Constant	−0.542 ***	−0.574 ***	−0.021
Bsize	0.002	–	0.003
Bmeet	0.006 *	–	0.003
Bind	0.144 ***	–	0.111 ***
BDual	0.148 ***	–	0.547
ACsize	0.056 ***	–	0.102 ***
ACind	0.147 ***	–	0.151 ***
ACfinexp	0.015	–	0.015 *
ACmeet	0.016 **	–	0.012 *
Fsize	0.022 ***	0.042 ***	0.024 ***
Flev	−0.001 ***	−0.001 ***	−0.001 ***
GovOwn	–	0.001 **	−0.056
Bsize × GovOwn	–	–	0.001
BMeet × GovOwn	–	–	0.001
BInd × GovOwn	–	–	0.024 **
BDual × GovOwn	–	–	0.064
ACsize × GovOwn	–	–	0.004 **
ACind × GovOwn	–	–	0.002
ACfinexp × GovOwn	–	–	0.006
ACmeet × GovOwn	–	–	0.001
R2	0.624	0.723	0.707
Adjusted R2	0.597	0.718	0.664
F-Statistic	23.074 ***	127.306 ***	16.488 ***
Observations (N)	150	150	150

*** p < 0.01, ** p < 0.05, * p < 0.10. Dashes (–) indicate variables not included in the respective model.

reveals an F-statistic of (23.074), accompanied by a p-value less than (0.01), which confirms the substantial influence of CG dimensions on CSR disclosure. The R² value of (0.624) indicates that governance variables explain 62.4% of the CSR Index variability when other factors remain unchanged. Accordingly, Hypothesis 1 is supported.

5.1.2. Sub-Hypotheses (H1.1–H1.8) Test

The regression analysis results for how each corporate governance dimension influences the CSR disclosure index appear in Table 7. H1.1 (Board Size): The coefficient value of (0.002) shows that the board size has no meaningful effect on CSR disclosure since it lacks statistical significance. Accordingly, H1.1 is unsupported. H1.2 (Board Meeting Frequency): The coefficient value of (0.006) shows that board meeting frequency has a marginally positive effect on CSR disclosure, which achieves statistical significance at the 10% level (p < 0.1) but fails to reach significance at the 5% level. Hence, H1.2 is unsupported. H1.3 (Board Independence): The coefficient value of (0.144) demonstrates a strong positive effect on CSR disclosure with high statistical significance, as shown by (p < 0.01). Therefore, H1.3 is supported. H1.4 (Board Duality): The coefficient value (B = 0.148) demonstrates a significant positive effect on CSR disclosure with statistical significance (p < 0.01). Thus, H1.4 is supported. H1.5 (Audit Committee Size): The coefficient value of (0.056) demonstrates a meaningful and statistically significant positive relationship with CSR disclosure at p < 0.01. Accordingly, H1.5 is supported. H1.6 (Audit Committee Independence): A coefficient value of (0.147) demonstrates a strong positive effect on CSR disclosure that reaches statistical significance at the 1% level. Hence, H1.6 is supported. H1.7 (Audit Committee Financial Expertise): The coefficient value of (0.015) shows no meaningful influence on CSR disclosure because it lacks statistical significance. Therefore, H1.7 is unsupported. H1.8 (Audit Committee Meeting Frequency): Results demonstrate that the coefficient (B = 0.016) reveals a positive statistically significant impact on CSR disclosure with a p-value less than 0.05. Accordingly, H1.8 is supported.

These findings suggest that CSR disclosure benefits from board independence and board duality, along with audit committee size, independence, and meeting frequency. Board size, along with board meeting frequency and audit committee financial expertise, fails to demonstrate statistical significance. While these dimensions remain potentially important, their significance is overshadowed by other governance factors that have a greater impact on CSR disclosure practices in Jordanian industrial firms.

The significant effects demonstrate that better compliance with governance rules strengthens companies’ dedication to social responsibility initiatives. It helps develop sustainable strategies while strengthening oversight mechanisms and stakeholder accountability through improved decision-making processes that support public interest goals. Good governance practices enable transparent CSR reporting while eliminating conflicts of interest and strengthening the audit committee’s ability to evaluate financial aspects of social responsibility. The data reveal that firm size and financial leverage both exert statistically significant effects on CSR disclosure according to the control variables.

5.2. The Second Hypothesis Test

The second hypothesis shows that government ownership produces a statistically significant positive impact on the CSR disclosure index of Jordanian industrial firms when (p < 0.05). Table 7 displays Model II multiple regression outcomes, which demonstrate that government ownership produces a significant positive impact on CSR disclosure with an F value of (127.306) and statistical significance under (p < 0.01). The model variables account for roughly 72.3% of the CSR index variance according to the coefficient of determination (R² = 0.723) under the assumption of ceteris paribus. Firm size and financial leverage demonstrated significant effects on CSR disclosure, according to findings. Accordingly, Hypothesis 2 (H2) is supported.

The research indicates that public corporations with government ownership demonstrate stronger commitments to social responsibility through their practices and policies, especially when it comes to community interaction and environmental sustainability efforts, as well as wider developmental aims. The presence of government ownership in firms enhances their internal oversight and accountability systems, which helps improve CSR practices.

5.3. Results of the Third Hypothesis Test

The third hypothesis shows that various corporate governance dimensions (Bsize, BMeet, BInd, BDual, ACsize, ACind, ACfinexp, ACmeet) together create a meaningful positive moderating impact on CSR disclosure indices in Jordanian industrial organizations when government ownership serves as the moderating variable (α ≤ 0.05). Hierarchical interaction regression analysis helped evaluate the independent variables’ impacts while considering the moderating variable to examine how government ownership affects the CG dimensions and the CSR disclosure relationship. The regression analysis in Table 7 indicates that for Hypothesis 3 under Model III, government ownership serves as a positive moderator between CG dimensions and CSR disclosure with an F value of (16.488) and a significance level of (p < 0.01). The determination coefficient value of (R² = 0.707) indicates that 70.7% of CSR disclosure variance stems from the combined variance in the variables, while other factors remain unchanged. The presence of government ownership in the model results in enhanced R², which demonstrates its substantial impact on the model’s explanatory strength. Accordingly, Hypothesis 3 (H3) is supported.

The analysis reveals that government ownership plays a crucial strategic function to strengthen corporate governance mechanisms, which lead to better CSR disclosure practices. Government ownership leads to better regulatory oversight and transparency while promoting social responsibility compliance, which improves corporate accountability and CSR performance.

The statistical model achieved overall significance, but many individual interaction terms between CG dimensions and government ownership did not reach statistical significance. The lack of statistical significance in these interactions could be caused by standardized governance structures that limit variability, combined with passive or minimal government stakes that reduce influence, together with industry-specific factors affecting governance dynamics and multicollinearity that masks distinct moderating effects.

The results displayed significant interactions between board independence and government ownership, as well as audit committee size and government ownership, which indicate that government ownership increases the effectiveness of these corporate governance elements when it comes to CSR disclosure. The study confirmed that control variables like firm size and financial leverage had significant impacts on CSR disclosure, which validates their critical role in developing CSR practices together with governance systems.

The statistically significant positive moderating effect of government ownership demonstrates its essential function in enhancing governance compliance and CSR engagement while promoting increased corporate accountability. The research demonstrates significant insights regarding how governance structures interact with state involvement in Jordan’s industrial sector alongside emerging market environments.

6. Discussion, Recommendations, and Implications

This research examines how corporate governance impacts CSR disclosure through the moderating role of government ownership by analyzing panel data from 30 industrial companies on the Amman Stock Exchange between 2018 and 2022. The study used board and audit committee characteristics as independent governance variables and company size and financial leverage as control variables. The study results demonstrate that board independence and board duality, along with audit committee size and independence, plus audit committee meeting frequency, positively impact CSR disclosure, while board size, meeting frequency, and audit committee financial expertise show no statistical significance.

The empirical evidence demonstrates that government ownership significantly strengthens the connection between governance dimensions and CSR disclosure.

Table 2 presents descriptive statistics that show Jordanian industrial companies have low levels of CSR disclosure due to weak enforcement and limited participation in social responsibility initiatives. The multivariate regression analysis presented in Table 7 shows that corporate governance mechanisms boost CSR disclosure significantly when combined with government ownership. Research results show that internal governance structures and ownership serve as vital compensatory mechanisms when external regulatory controls are inadequate within emerging markets.

The results of this research show a strong correlation with findings from previous studies. This research supports H. L. K. Amin’s (2019) findings by demonstrating that implementing CG mechanisms positively affects CSR commitment and stakeholder trust. The study findings agree with Maghrabi (2018), who demonstrated a meaningful link between CG practices and CSR initiatives.

The research results confirm Abu Saleem’s (2018) assertion that internal and external governance mechanisms positively influence CSR performance. The study’s findings receive further validation from research conducted by Su et al. (2025), who showed that state-owned firms in emerging markets display superior CSR efforts compared to their privately owned counterparts, which demonstrates government ownership’s essential role according to this study’s results. Similarly, the findings agree with Bolouriani et al. (2021) studies, which confirmed the beneficial link between corporate governance and CSR performance.

According to Buertey et al. (2019), larger boards and greater board independence lead to better CSR disclosure in the South African business environment. The research by Buertey et al. (2019) showed that both the size of boards and their independence improve CSR disclosure, which strengthens the argument for effective governance systems.

Farhan and Freihat (2021) found enhanced audit committee effectiveness in CSR disclosure when government ownership exists in the Gulf region, which aligns with the moderating role discovered in this research. Likewise, these study findings aligned with Al-Zamli et al. (2021), who observed that the quality of CSR disclosure in Iraqi commercial banks benefits from effective audit committees and ownership structure, among other governance characteristics.

Al-kababji’s (2022) research in Palestine revealed that CSR disclosure benefits from stronger shareholder protection, together with increased transparency and board responsibilities, which are consistent with the study’s broader observed trends. Similarly, Zaid et al. (2019) demonstrated how board independence positively affects outcomes but found different results for board size benefits and CEO duality drawbacks compared to this study.

The current research contradicts findings by Aboud and Yang (2022), which showed that larger board sizes benefit CSR performance in Chinese companies, because this study discovered no significant impact from board size. Similarly, although Thuy et al. (2024) confirmed that board independence and state ownership benefit organizations, they discovered that smaller board sizes and CEO duality reduced CSR disclosure, which partly contradicts current research findings.

Saudi Arabia displayed inconsistent findings in their research outcomes. Abu Saleem (2018) found governance mechanisms significantly improved CSR disclosure, while Yamani (2018) discovered no significant connection between governance practice adherence and CSR disclosure, except within utilities and long-term goods sectors, because social responsibility regulations were not enforced.

Moreover, Yang et al. (2024) demonstrated how external governance forces like passive investors and shareholder activism shape CSR engagement while asserting that internal governance and external pressures remain essential for understanding CSR practices.

These results lead to suggestions and recommendations for improving CG and CSR disclosure practices in Jordan. The organizational priority must be to improve board independence and maintain clear boundaries between executive positions and board responsibilities. Audit committees will improve their effectiveness through frequent meetings and a greater number of independent members. The strategic use of government ownership can enhance CSR activities by positively moderating the relationship between governance and CSR. Board structures require focused review and improvement efforts, especially where board size and meeting frequency have shown no significant effects. The importance of financial expertise within audit committees requires re-evaluation to verify its effectiveness in advancing CSR programs. Business organizations need to synchronize their governance strategies with CSR goals to achieve complete incorporation of sustainable practices throughout their operations. The regulatory bodies must enhance corporate governance structures by bringing them into conformity with global standards and focusing on CSR transparency requirements. Through cooperation between policymakers and stakeholders who provide the necessary guidance and incentives, companies will improve their CSR engagement, leading to a more transparent and socially responsible industrial sector in Jordan.

7. Limitations and Directions for Future Research

The research analyzed only industrial public shareholding companies that were listed on the Amman Stock Exchange. Subsequent research should investigate additional emerging markets to determine how corporate governance structures and government ownership impact CSR disclosure within various institutional and regulatory environments. Incorporating service sectors and financial institutions into the sample will broaden the sectoral view and challenge the findings’ general applicability.

This study explored government ownership as a moderator, but future studies should investigate how managerial ownership and other ownership structures, like institutional ownership, foreign ownership, and ownership concentration, moderate effects. Subsequent research should explore how board diversity (such as gender and expertise), together with audit committee meeting quality, affects different CSR aspects like environmental and social disclosures. A valuable research direction exists in evaluating how government ownership functions as a moderator in industries with various levels of regulatory pressure. Longitudinal studies would enhance understanding of how evolving governance structures affect CSR practices and shed light on governance dynamics and social responsibility in emerging markets.