Institutional ownership and corporate governance: evidence from Bahrain

Abstract

This study aims to investigate the relationship between institutional ownership and the level of corporate governance in the Kingdom of Bahrain. A multi-regression analysis model was used to investigate the relationship between corporate governance and institutional ownership. Additionally, certain firm characteristics were controlled to study the influence of institutional investment on governance. The results indicated that there is a significant negative relationship between institutional ownership and the level of corporate governance. The researchers assumed that governance of firms may take a number of forms that would decrease the need for improving other corporate governance mechanisms as a result. This study offers recommendations to various stakeholders, whereby companies should hire external auditors that are from the Big4, because they would encourage and contribute to increasing the level of corporate governance. Furthermore, workshops and training courses should be conducted in order to increase the awareness of the corporate governance code in Bahrain.