Corporate governance and the performance of non-financial firms: the case of Oman

Hana Bawazir,Fatema AbdulMajeed,Anis Khayati

doi:10.9770/jesi.2021.8.4(36)

Abstract

Last two decades, corporate accounting scandals have represented a serious challenge to economic sustainability. To protect the shareholders right against abusive managerial conduct, the concepts of corporate governance structures and provisions have widely attracted the attention of practitioners and researchers. The main purpose of this paper is to examine the linkage between corporate governance and the performance of non-financial firms listed on Muscat Securities Market over the period 2007-2017. Additionally, whether financial leverage acts as a mediating factor is investigated. A panel fixed effect regression is conducted to test if there is a relationship between corporate governance, capital structure and firm performance. Overall results show that women on board, audit committee size, leverage and firm size are positively related to firm performance. The study presents a strong understanding to senior management to be focused more on corporate governance codes and regulations, as well as to both internal and external auditors to strictly monitor the application of corporate governance regulations.

Highlights

Corporate governance is the set of relationships and responsibilities between people involved in companies and external stakeholders establishing rules, policies and procedures appropriated for the management, administration and business control (Badele & Fundeanu, 2014)
The results further revealed that mean value of audit committee size is 3 and 69% of the firms engaged auditors from the big4
The results indicate that other corporate governance variables such as board size and board independence are not associated with firm performance

Summary

Introduction

Corporate governance is the set of relationships and responsibilities between people involved in companies and external stakeholders establishing rules, policies and procedures appropriated for the management, administration and business control (Badele & Fundeanu, 2014). The global economic crisis of 2007 forced rigid public, political and regulatory scrutiny on the adoption of obligatory corporate governance practices of worldwide companies. Corporate governance facilitates the company to maximize the value of the firm which can be observed through the performance of the firm (Gupta & Sharma, 2014). Firm performance might affect the choice of capital structure (Margaritis & Psillaki, 2010), and corporate governance can be used as a tool to reduce the conflicts between agents, which may have impact on a firm’s capital structure (Detthamrong et al 2017)

Objectives

Results

Conclusion