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Effects of board and ownership structure on corporate performance Evidence from GCC countries

Effects of board and ownership structure on corporate performance Evidence from GCC countries Purpose – The purpose of this paper is to examine the effect of ownership structure and board composition on bank performance as measured by Tobin's Q and market to book value in Gulf Co‐Operation Council (GCC) countries. Design/methodology/approach – A dataset of 58‐listed banks of GCC countries for the period 2010 is used. The methodology is based on multivariate regression analysis. Findings – The result shows that the extent of family ownership, foreign ownership and institutional ownership has a significant positive association with bank performance. However, government ownership does not have a significant impact on performance. Other governance variables such as CEO duality and board size appear to have an insignificant impact on performance. Practical implications – Better corporate governance mechanisms are imperative for every company and should be encouraged for the interest of the investors and other stakeholders. The study implies that ownership by corporate governance is more effective for GCC countries. The study also suggests that unlike in western countries, corporate boards may not be an effective corporate governance mechanism in GCC countries. Originality/value – The paper extends the findings of the corporate governance and bank performance relationship in GCC countries that are neglected in the previous literature. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting in Emerging Economies Emerald Publishing

Effects of board and ownership structure on corporate performance Evidence from GCC countries

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Publisher
Emerald Publishing
Copyright
Copyright © 2014 Emerald Group Publishing Limited. All rights reserved.
ISSN
2042-1168
DOI
10.1108/JAEE-02-2012-0007
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to examine the effect of ownership structure and board composition on bank performance as measured by Tobin's Q and market to book value in Gulf Co‐Operation Council (GCC) countries. Design/methodology/approach – A dataset of 58‐listed banks of GCC countries for the period 2010 is used. The methodology is based on multivariate regression analysis. Findings – The result shows that the extent of family ownership, foreign ownership and institutional ownership has a significant positive association with bank performance. However, government ownership does not have a significant impact on performance. Other governance variables such as CEO duality and board size appear to have an insignificant impact on performance. Practical implications – Better corporate governance mechanisms are imperative for every company and should be encouraged for the interest of the investors and other stakeholders. The study implies that ownership by corporate governance is more effective for GCC countries. The study also suggests that unlike in western countries, corporate boards may not be an effective corporate governance mechanism in GCC countries. Originality/value – The paper extends the findings of the corporate governance and bank performance relationship in GCC countries that are neglected in the previous literature.

Journal

Journal of Accounting in Emerging EconomiesEmerald Publishing

Published: Feb 25, 2014

Keywords: Ownership structure; Firm value; GCC; Board composition

References