- Title
- Corporate governance and firm performance in Saudi Arabia
- Creator
- Alsahafi, Ashraf Mohammadsaleh
- Relation
- University of Newcastle Research Higher Degree Thesis
- Resource Type
- thesis
- Date
- 2017
- Description
- Research Doctorate - Doctor of Philosophy (PhD)
- Description
- Corporate governance in a specific country relates systematically to its social, economic and legal structures. From this standpoint, and since Saudi Arabia has unique cultural, economic and political features, this study aims to explore corporate governance practices in Saudi Arabia. A close look at the influence of these features on the Saudi business environment reveals that agency theory is not the appropriate theory that can be applied in the Saudi context, despite its widespread adoption in the extant studies of corporate governance. Alternatively, stewardship theory seems to be the most relevant theory to the Saudi business environment. Therefore, stewardship theory is adopted as the main theoretical framework for this study, augmented with other theories including stakeholder, resource dependency and institutional theories. Taking these multiple theoretical frameworks as a key point of departure from previous studies, this thesis seeks to examine the relationship between corporate governance and firm performance, focusing on three main areas: board of director characteristics, ownership structure and capital structure. The study uses secondary data obtained from annual reports of all non-financial listed firms in Saudi Arabia over a six-year period from 2009 to 2014. Multiple performance measures including both accounting-based and market-based measures are adopted. A number of firm characteristics including firm size, age, growth, capital expenditure, leverage and industry are employed as control variables. The study utilises quantitative analysis techniques including both descriptive and inferential statistics such as ANOVA, t-tests and regression analysis. A lagged structure method is also employed to address endogeneity problems. Corporate governance in a specific country relates systematically to its social, economic and legal structures. From this standpoint, and since Saudi Arabia has unique cultural, economic and political features, this study aims to explore corporate governance practices in Saudi Arabia. A close look at the influence of these features on the Saudi business environment reveals that agency theory is not the appropriate theory that can be applied in the Saudi context, despite its widespread adoption in the extant studies of corporate governance. Alternatively, stewardship theory seems to be the most relevant theory to the Saudi business environment. Therefore, stewardship theory is adopted as the main theoretical framework for this study, augmented with other theories including stakeholder, resource dependency and institutional theories. Taking these multiple theoretical frameworks as a key point of departure from previous studies, this thesis seeks to examine the relationship between corporate governance and firm performance, focusing on three main areas: board of director characteristics, ownership structure and capital structure. The study uses secondary data obtained from annual reports of all non-financial listed firms in Saudi Arabia over a six-year period from 2009 to 2014. Multiple performance measures including both accounting-based and market-based measures are adopted. A number of firm characteristics including firm size, age, growth, capital expenditure, leverage and industry are employed as control variables. The study utilises quantitative analysis techniques including both descriptive and inferential statistics such as ANOVA, t-tests and regression analysis. A lagged structure method is also employed to address endogeneity problems. The findings of this study, in terms of accounting-based measures of performance, indicate the existence of a relationship between firm performance and the three areas of focus in the directions that would be expected when examining the impact of corporate governance through the lenses of stewardship theory and resource dependency theory. The results related to the board of director characteristics indicate that while there is a negative relationship between board independence and firm performance, other board characteristics, namely board size, CEO duality, CEO tenure and family CEO, are positively associated with firm performance. Regarding ownership structure, the results reveal a positive relationship between ownership concentration and firm performance. Among the types of ownership, only family and managerial ownership have a positive impact on firm performance. Interestingly, family ownership is found to have a positive impact on firm performance only when family owners are on the board of directors. With respect to capital structure, the findings indicate a negative relationship between capital structure and firm performance. In addition, the study reveals a positive impact of Islamic debt on firm performance. On the other hand, the results based on market-based measures of performance show no significant impact of the board of director characteristics, ownership structure and capital structure on firm value. In light of the recent adoption of the OECD principles of corporate governance across a range of emerging markets, a key implication of this thesis is that such regulations may need to be refined to better reflect the specific context of the countries within which they operate. The findings of this study provide valuable implications for policymakers, regulators, firms, shareholders and investors in Saudi Arabia.
- Subject
- corporate governance; firm performance; Saudi Arabia; stewardship theory
- Identifier
- http://hdl.handle.net/1959.13/1347421
- Identifier
- uon:30040
- Rights
- Copyright 2017 Ashraf Mohammadsaleh Alsahafi
- Language
- eng
- Full Text
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