Muhammad Sadiq Shahid, Nadia Bajaber
This study examined the impact of corporate governance practices on company performance in GCC countries. Data from 236 non-financial firms listed on GCC stock exchanges from 2015-2020 has been collected. In this study, taking into consideration the nature of panel data, Pooled OLS, fixed effects and Random effect methods were employed.
Findings indicates that corporate governance is significantly associated with industry-adjusted returns. Findings revealed that corporate governance has a significant impact on the financial performance of firms in GCC countries. We have also found that Board size, institutional ownership' and moderate the relationship between capital structure and financial performance of firms.
Further found that those firms which have strong corporate governance practices in terms of a board of directors and frequency of meetings perform well. Findings also show that a firm’s performance increases significantly in the presence of institutional ownership. We also documented that financial performance of firms improved after implementation of a corporate governance soft code. These findings suggest that internal and external coalitions interact with each other to influence the firm's conduct. This paper contributes to existing literature on factors that boost financial performance, particularly as regards the association between corporate governance and the financial performance of companies in GCC countries. The practitioners and managers are obliged to exercise greater caution in terms of policy making and risk managing, and this paper provides supporting evidence for this.