The Impact of Board and Audit Characteristics on the Financial Performance of UAE Listed Firms

H, Abdulfattah Mohamed G Khalifa; Natoli, Riccardo; Zuhair, Segu

doi:10.5296/ijafr.v10i2.16481

Cited by 10 publications

(18 citation statements)

References 35 publications

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“…However, the empirical literature has not reached conclusive results. Shakir (2008), Abidin et al (2009), Neville (2011), Ahmed and Hamdan (2015), Buallay et al (2017) and Khalifa et al (2020) all find that more outside directors improves firm performance. However, Yermack (1996), Bhagat and Bolton (2002) and Zhou et al (2018) find no such relation.…”

Section: Literature Reviewmentioning

confidence: 96%

“…The relationship between firm performance and selected corporate governance measures is examined in a fairly well-developed literature, including board size and independence, the presence of the duality of CEOs, insideroutsider ownership, and board duties (Bhagat and Bolton, 2002;Elsayed, 2007;Abidin et al, 2009;Adusei, 2011;Fallatah and Dickins, 2012;Gupta and Sharma, 2014;Al-Ghamdi and Rhodes, 2015;Al-Sahafi et al, 2015;Ahmed and Hamdan, 2015;Naushad and Malik, 2015;Buallay et al, 2017;Alqatamin, 2018;Zhou et al, 2018;Rahman et al, 2019;Khalifa et al, 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

“…The impact on firms of board size is the focus of many studies (Hermalin and Weisbach, 2003;Haniffa and Hudaib, 2006;Sunday, 2008;Shakir, 2008;Neville, 2011;Al-Ghamdi and Rhodes, 2015;Zhou et. al., 2018;Khalifa et al, 2020). While some studies advocate smaller boards (Lipton and Lorsch, 1992;Jensen, 1993;Yermack, 1996), others advocate larger boards to underpin greater scrutiny and better decision processes (Adams and Mehran, 2003;Anderson and Reeb, 2003a, b;Coles et al, 2008).…”

Section: Literature Reviewmentioning

confidence: 99%

“…In general, evidence linking governance and company performance is inconclusive. Some studies find that better governance significantly improves firm performance (Ahmed and Hamdan, 2015;Baullay et al, 2017;Alqatamin, 2018;Rahman et al, 2019;Khalifa et al, 2020), while others find a negative relation (Hutchinson, 2002;Bauer et al, 2004). Further, a number of studies find no relation (Prevost et al, 2002;Park and Shin, 2003;Fallatah and Dickins, 2012;Gupta and Sharma, 2014).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Many studies examine the impact of corporate governance on firm performance globally and in the countries of the Gulf Cooperation Council (GCC) (Abidin et al, 2009;Adusei, 2011;Fallatah and Dickins, 2012;Gupta and Sharma, 2014;Ahmed and Hamdan, 2015;Al-Ghamdi and Rhodes, 2015;Naushad and Malik, 2015;Baullay et al, 2017;Alqatamin, 2018;Zhou et. al., 2018;Rahman et al, 2019;Khalifa et al, 2020). For instance, Fallatah and Dickins (2012) observe that governance and corporate performance are not associated among Saudi listed firms, while Gupta and Sharma (2014) find that such governance has a weak effect on both performance and company stock prices in South Korean and Indian firms.…”

Section: Introductionmentioning

confidence: 99%

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Corporate Governance Mechanisms and Firm Performance in Saudi Arabia

Boshnak¹

2021

IJFR

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This paper examines the impact of corporate governance mechanisms including board size, independence, and meeting frequency, audit committee size and meeting frequency, CEO duality and ownership concentration on the operational, financial and market performance of Saudi listed firms using a contingent theoretical-based framework drawing on agency theory, stewardship theory and resource dependence theory. This study examines 210 listed Saudi Stock Exchange firms over the timeframe 2017 to 2019. The paper applies both a manual content and regression analysis approach. The results show that firm performance deteriorates with board size and independence, audit committee and meeting frequency, and the presence of CEO role duality, while performance improves with board meeting frequency and ownership concentration. Thus, Saudi firms should respond by maintaining smaller boards and more frequent meetings, keeping the Chair and CEO roles separate, and maintaining smaller audit committees with more focused meetings. Further, the appointment of independent directors only makes a meaningful contribution to firm performance where they are truly independent. Finally, more concentrated ownership tends to encourage better firm performance due to the regime of monitoring and discipline concomitant with more powerful shareholders. The implications of this paper are threefold. First, the implementation by Saudi Arabia of the latest corporate governance regulations and IFRS adoption almost certainly impact firm performance markedly. Second, corporate governance regulations should recognize the role of more frequent board meetings and more concentrated ownership in enhancing corporate performance. Third, stakeholders should apply pressure on investee firms to maintain smaller boards, engage genuinely independent directors, separate the role of Chairman and CEO, and maintain smaller audit committees with fewer and more effective meetings. The results should help corporate boards when deciding on the best corporate governance mechanisms to enhance firm performance. Further, the study should provide policy makers with a better understanding of the corporate governance structures required to promote better performance by drawing on existing theories and the empirical modelling, in an emerging economy setting such as Saudi Arabia, a new and broader data set, thereby informing better future policy and protecting shareholders’ interests.

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Section: Literature Reviewmentioning

confidence: 96%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Corporate Governance Mechanisms and Firm Performance in Saudi Arabia

Boshnak¹

2021

IJFR

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Impact of environmental, social and governance disclosure on dividend policy: What is the role of corporate governance? Evidence from an emerging market

Ellili

2022

Corp Soc Responsibility Env

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This study examines the nexus between environmental, social, and governance (ESG) disclosure and dividend policy by considering the major role of corporate governance.The sample consists of companies traded in the UAE financial markets during the period 2010-2020. Using data collected from Bloomberg and applying panel data regressions, the results indicated a positive relationship between ESG and dividend payouts. In addition, the results reveal that board of directors' independence is a mediator in the relationship between ESG disclosure and dividend payout, whereas institutional ownership and foreign ownership play a negative and positive moderating role between ESG and dividend payout, respectively. The findings could help UAE financial regulators integrate ESG information into the reporting process, implement effective corporate governance mechanisms to provide accurate information to shareholders, and manage their portfolios more efficiently. This study is the first to examine the relationship between ESG disclosure and dividend policies by considering corporate governance, and contributes to a better understanding of the financial impact of ESG disclosure on dividend policy.

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