The lessons from the 2008 global financial crisis show that excessive risk taking and governance failures contribute to the failure of several banks. As a result, the relationship between corporate governance mechanisms and risk taking has been the subject of many studies. However, extant studies report inconclusive results. Therefore, this study aims to investigate the relationship between CEO power and bank risk in the UAE using data over the period of 2015–2018 and a sample of 19 UAE banks. The study uses a Pearson pairwise correlation to analyze the relationship between CEO power and bank risk. In addition, a two-tailed t-test is used to examine the differences between conventional and Islamic banks in terms of CEO power and risk-taking. The results of the study show that CEO power measured using CEO duality and CEO tenure reduces risk. Furthermore, the paper indicates that larger boards and higher CEO ownership tend to increase risk. The study also reports that conventional banks have higher return variability, larger boards and powerful CEOs than Islamic banks. However, Islamic banks tend to have higher non-performing finances than conventional banks. The study provides important insights on the relationship between CEO power and bank risk and concurs with earlier studies. The findings can be of interest to policy makers and can be used as input data for the development of corporate governance mechanisms. Shareholders can also use the survey results as input when appointing a CEO for their banks.

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The conventional discounting capital budgeting techniques have been widely criticized for being inappropriate in incorporating multi-criteria interactions and for focusing on one-off single objective of maximizing net present value. This paper modifies a Multiple Objective Linear Programming (MOLP) optimization model of Levary and Seitz (1990). It adds to the objective function the mitigation of agency costs as a proxy of good corporate governance principles and capital market interactions. The goal of the study is to examine the impact of agency costs on the present value of a long term capital project and investment appraisal decision making in the airline industry to support better capital investment decision making in the future. Recent collapses of high profile companies in airline industry and other industries such as Flyglobespan Airline (in the year 2009) in Scotland, Ansett Airline (in the year 2001)in Australia, Enron(in the year 2001)and Lehman Brothers (in 2008)in the U.S whose impact is still being experienced today provide us with evidence of how important the minimization of agency costs is for the survival and success of organisations and the huge amounts involved as a result of poor corporate governance. The results reveal that debt financing which is often provided by capital markets plays an influential role in shaping the investment appraisal decisions through interest rates and debt covenants embedded in the debt contracts. The results show that mitigation of agency costs improves the firm’s cash flow, financial management and corporate governance. It discourages illegal earnings management practices, enhances investment decisions, investors’ confidence and reliability in the firm’s investment decisions and hence enhances the firm value.

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