Corporate governance and corporate performance: evidence from Kuwait

Al‐Shammari, Bader; Al-Sultan, Waleed

doi:10.22495/cocv7i1c3p1

Cited by 14 publications

(18 citation statements)

References 54 publications

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“…In Kuwait, Al‐Shammari and Al‐Sultan (2009) investigated the relationship between corporate governance mechanisms and firm performance for non‐financial companies on the KSE from 2004 to 2007 and found a positive relationship between role duality and firm performance measures. In the Kuwaiti setting, listed firms are not required by law to separate the role of firm chairman and CEO (or managing director).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

“…Several studies in corporate governance literature have investigated the relationship between firm performance and board composition in Kuwait, including those of Al‐Shammari and Al‐Sultan (2009) and Al‐Saidi (2010). However, all of these studies excluded banks from their samples due to differences in the regulations and capital structures.…”

Section: Introductionmentioning

confidence: 99%

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Board composition and bank performance in Kuwait: an empirical study

Al‐Saidi

Al‐Shammari

2013

Managerial Auditing Journal

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PurposeThis study aims to examine the relationship between board composition (i.e. non‐executive directors, family directors, role duality and board size) and bank performance, using a sample of nine listed Kuwait banks over the 2006 to 2010 period.Design/methodology/approachThe study uses ordinary least squares (OLS) and two‐stage‐least squares (2SLS) to test such a relationship and to address endogeneity in explanatory variables.FindingsThe results provide some evidence that board composition of banks relates to their performance. According to the OLS regression results, only board size and proportion of non‐executive directors negatively affect bank performance. Meanwhile, the 2SLS results indicate that role duality positively affects a bank's performance while board size affects a bank's performance negatively.Research limitations/implicationsAlthough the model has explained a significant part of the variation in performance, still unexplained is a material part that represents the “noise” of the model. Data availability limited the ability to study other aspects of corporate governance mechanisms such as number of audit committee members on board. The sample size is small; thus, in future research, the sample size could be increased by including a longer period of time or different countries such as members of the Gulf Cooperation Council (GCC) (Kuwait, Bahrain, Qatar, Oman, United Arab Emirates, and Saudi Arabia).Practical implicationsGiven the importance of effective boards in monitoring bank values, more actions and rules need to take place in Kuwait to improve the efficacy of boards in protecting shareholders and their interests in Kuwaiti banks. Regulators may mandate a corporate governance code or adopt the OECD corporate governance principles as a starting point in Kuwait. Kuwaiti companies may use the findings to make appropriate choices about board appointments and best governance to improve performance. Investors also may use the findings to understand Kuwaiti companies. Such findings may assist them to diversify their investment portfolios.Originality/valueThis study asserts to provide insights on the relationship between bank performance and board composition in Kuwait. The study extends prior research and investigates the roles of board of directors in banks in the context of an emerging market characterized by weak shareholder protection and highly concentrated ownership.

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Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Board composition and bank performance in Kuwait: an empirical study

Al‐Saidi

Al‐Shammari

2013

Managerial Auditing Journal

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“…This finding was very close to the finding of Alfaraih et al 2012in their 2010 study of the ownership structure in Kuwait in which they found that the concentration of ownership by institutions was 55%. Also, Al-Shammari and Al-Sultan (2009) reported this concentration to be about 55%. Omran et al 2008) found that the concentration percentage of the largest shareholders averaged 48% for four Arab countries.…”

Section: Resultsmentioning

confidence: 91%

Ownership Concentration and Firm Performance : The Case of Kuwait

Al‐Saidi

2013

JJBA

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Using Kuwaiti data, this study examined the relationship between the concentration and composition of ownership and the performance of firms. In the study, we estimated and examined this relationship using ordinary least squares (OLS) for a sample of 130 Kuwaiti firms listed on the Kuwait Stock Exchange (KSE) from 2009 to 2012. The overall concentration of ownership by large shareholders showed no impact on firms' performance. However, when the type of large shareholders was introduced, only the concentrations of government ownership and families' (individuals) ownership influenced firms' performance. Therefore, not all concentrations of ownership among large shareholders are useful to listed Kuwaiti firms.

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“…The mean value of board size is about 6.12, while board independence equals 82%, and family directors in Kuwait equals 23%. Al-Shammari and Al-Sultan (2009) found ownership concentration by large shareholders equals 55%, board independence equals 82%, and board size equals 6.39. Notes: ***, **, and * significant at the 0.01.…”

Section: Descriptive Analysismentioning

confidence: 98%

Corporate Governance Mechanisms and Corporate Social Responsibility (CSR) in Kuwaiti Listed Firms

Al‐Saidi¹

2020

ASS

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Firms must maintain a balance between their performance and corporate social responsibility (CSR). This study examines the relationship between corporate governance mechanisms and the CSR of firms listed on the Kuwait Stock Exchange (KSE) within the framework of agency theory. Using a sample of 86 firms in 2019, this study explored five corporate governance mechanisms (i.e., ownership concentration by large shareholders, ownership concentration by government, board size, board independence, and family directors) and five control variables (i.e., debt, firm size, firm age, profitability, and industry type). The study used the index checklist to measure CSR and found that ownership concentration by large shareholders, ownership concentration by government, and board size affect a firm’s social responsibility while other variables have no impact. This study was the first to examine the impact of corporate governance mechanisms on corporate social responsibility in Kuwait after introducing the new corporate governance rules, and the findings will help Kuwait’s government, firms, and investors evaluate the current rules and improve CSR requirements.

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Corporate governance and corporate performance: evidence from Kuwait

Cited by 14 publications

References 54 publications

Board composition and bank performance in Kuwait: an empirical study

Board composition and bank performance in Kuwait: an empirical study

Ownership Concentration and Firm Performance : The Case of Kuwait

Corporate Governance Mechanisms and Corporate Social Responsibility (CSR) in Kuwaiti Listed Firms

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