Abstract
ABSTRACTCorporate governance (CG) has received much attention in the current studies all over the world especially after many corporate scandals and the failures of some biggest firms around the world such as Commerce Bank (1991) Enron (2001), Adelphia (2002), and World Com (2002).The aim of this study is to examine the relationship between board mechanisms (audit committee size, audit committee composition, board size, and board composition) and firm performance (ROA) based on the annual reports of listed companies in the year 2011 of sample of non-financial firms in the Saudi Market (Tadawul). For the purpose of this study, data was collected from a sample of 102 non-financial listed companies.Furthermore, an analysis of regression analysis is utilized to examine the relationship between board characteristics and firm performance. The results of this study reveal that audit committee size, audit committee composition and board size have no effect on firm performance in the selected sample while board composition has a significant negative relationship with firm performance.
Highlights
1.1 BackgroundCorporate governance (CG) has received much attention in the current studies all over the world especially after many corporate scandals and the failures of some biggest firms around the world such as Commerce Bank (1991) Enron (2001), Adelphia (2002), and World Com (2002)
This study examines the relationship between board characteristics (AC size, board composition, board size, and board composition) and firm performance (ROA) based on the annual reports of listed companies in Saudi Arabia in 2011
The objective of this paper is to examine the relationship between corporate governance mechanisms (AC size, AC composition, board size, and board composition) and firm performance (ROA) in Saudi Arabia
Summary
1.1 BackgroundCorporate governance (CG) has received much attention in the current studies all over the world especially after many corporate scandals and the failures of some biggest firms around the world such as Commerce Bank (1991) Enron (2001), Adelphia (2002), and World Com (2002). As the environment business has become very competitive, the uncertainty and risk are the main characteristics for today’s business. Under this modern environment, it became very difficult to predict and control the factors that affect the performance of the firms (Kuratko& Morris, 2003). Good CG practice could be one of the best solutions to reduce the uncertainty and the risk in the current business environment. It could attract investment capital as a result of reducing the risk level. Agency theory arranges the relationship between board characteristics and firm performance (Kyereboah-Coleman &Biekpe; 2006)
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