Corporate governance, ownership structure and firms’ financial performance: insights from Muscat securities market (MSM30)

Abstract

Purpose The purpose of this study is to investigate the relationship between selected board characteristics and ownership elements and the performance of firms listed in the Muscat Securities Market (MSM30). The examination focused on how the firm financial performance was affected by the board size, the number of board meetings and the ratio of the independent board of directors along to the ownership concentration types (i.e. institutional, state and concentrated individual ownership). Design/methodology/approach Data were extracted from the annual reports available online on the MSM30 website over a period of seven years (2009–2015). The sample consisted of 14 firms belonging to the non-financial sector. The data were of a balanced type and there were 98 observations. The analysis was conducted using the ordinary least square in STATA with the use of the robustness technique of standard error. Findings The findings of this study provide evidence that the selected elements for board characteristics and ownership influence firm performance. Nevertheless, such influence has its interpretation that differs to some extent from other securities markets in the developing countries. For instance, the ratio of the independent board of directors, the number of board director’s meetings, state ownership and concentrated individual ownership were inversely affecting the firm performance. However, institutional ownership and board size were found to have a positive effect on firm performance. Originality/value Studies on the influence of corporate governance and ownership structures in the context of Oman are still scarce. MSM30 received little attention, even though such an index encompasses the most liquid and the most profitable firms. MSM30 is an important index for investors in Oman looking for capital gains. Accordingly, this present study contributes to the knowledge body by providing new findings related to Oman and compares it with the other markets within Gulf Council Countries (GCC) and around the world. This will provide more understanding of the Omani context. Moreover, the authors anticipate that the outcomes of this research, which so far is the most comprehensive study in the Omani context in terms of the impact of corporate governance and ownership structure on firm financial performance can significantly shape corporate governance discourse, practices and policies in Oman, in particular, and in other GCC countries in general, to improve financial performance and corporate sustainability.

Risk management and corporate governance of Islamic banks: evidence from GCC countries

“…Regarding the impact of CG on the firms' performance, Asghar et al (2020) found that CG has a significantly positive effect on the firm's value and performance measures. Queiri et al (2021) found that the size of the board of directors positively impacts a firm's performance in nonfinancial services companies listed in the Muscat stock market, while the ratio of the independent board of directors and the number of board director's meetings were inversely affecting the firm performance. Zaid et al (2020) investigated the impact of CG practices on capital structure decisions for nonfinancial services companies listed in the Palestine securities market and found that board size and board independence are more positive under conditions of high level of gender diversity.…”

Revenue Identification in Attaining Consensus Estimates on Income Predictions: The Function of Ownership Concentration and Managerial Ownership Confirmation from Poland

“…Financial pellucidity, containing clearness of transactions, is one of the mainstays of sustainability [75,76]. The research sphere analysing the relationships between the ownership structure, monitoring activities through the accounting information and sustainability is an important part of contemporary finance and accounting [77][78][79][80]. Earnings management influences monitoring activities of the enterprises, therefore it has a direct relationship with sustainability and economic performance [81,82].…”

Does risk matter for executive compensation?

“…The control variables have been selected based on a detailed literature review. Prior scholars (Abraham and Singh, 2016;Benkraiem et al, 2017;Bova et al, 2015;Diasc et al, 2020;Mathew et al, 2016;Mathew et al, 2018;Pergola and Joseph, 2011;Petra and Dorata, 2008;Queiri et al, 2021) proved that the following control variables are the significant attributes for explaining corporate governance, executive compensation and their relation to risk: firm size, leverage, sector, institutional ownership, firm in loss, CEO's tenure, nationality, age and ownership, international board of directors (BOD), the board size, independent BOD, risk committee and CEO duality ( Because of the panel data set and the significant results of the Hausman test, fixed effect regression is the most appropriate technique for the models in this paper (Baltagi, 2012). Thus, the fixed firm-year effect regression analysis with robust standard errors was used to test the hypotheses.…”

“…). For instance,Mathew et al (2018),Abraham and Singh (2016) andMathew et al (2016) found a strong association between corporate governance structures, especially for the board structure and CEO power/duality and risk Queiri et al (2021),Bova et al (2015). andPergola and Joseph (2011) have highlighted the link between institutional ownership and CEO's ownership and corporate governance structures.Table1…”