Abstract
Following the global financial crisis in 2008, many countries have introduced economic and corporate reforms to assure fair markets and mitigate the risk of management misconduct. In this context, Kuwait has implemented two new major laws to restructure its capital markets and improve corporate governance. The two laws ere the Capital Market Authority Law (CMAL) and Kuwait Companies Law (KCL). In this paper, the authors sought answers to two questions: (1) has the performance of the listed companies changed in response to the enforcement of the laws? and (2) was there a direct influence of the laws on that change? The authors found some evidence of significant change in performance. Moreover, they provide evidence of KCL viability as a determinant of better performance. Interestingly, CMAL was found to be inadequate for improving firm performance. Implications and recommendations for further research are provided.
Highlights
It is widely accepted that value maximization is the ultimate goal of business firms
Capital Market Authority Law (CMAL) was found to be inadequate for improving firm performance
The hypothesis related to this indicator is that en- Agency cost is the money charged to the firm beforcing CMAL and Kuwait Companies Law (KCL)’s Corporate governance (CG) rules will prevent cause of management misconduct
Summary
It is widely accepted that value maximization is the ultimate goal of business firms. The new laws imposed many CG firm performance and corporate governance articles and provisions that forced all listed commechanism for Karachi stock market. The MB ratio is related to company valuation It is variables in question are profit multiplier, total calculated as the market stock price over book valassets turnover, debt ratio, return on equity and ue per share (BVPS). The hypothesis related to this indicator is that en- Agency cost is the money charged to the firm beforcing CMAL and KCL’s CG rules will prevent cause of management misconduct. Forcing CMAL and KCL’s CG rules will encourage managers to raising new external funds to finance In this paper, we investigate: viable investment leading to a higher debt ratio and better value. Hypothesis 4: H0: PE ratio before and after the enforcement H1: MB ratio before and after the enforcement of KCL’s CG rules is the same
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