The role of corporate governance on financial performance: Evidence from the Saudi Arabian Listed Companies

Abstract

This study aims to examine the role of corporate governance codes on financial performance of companies within the context of Saudi Arabia. This study collected data from 120 listed companies on Tadawul in period between 2014 and 2018. The data covers variables related to board characteristics (frequency of meeting, size, interlocking and independence) as independent variables and financial performance (Tobin’s q) as dependent variable. Moreover, data related to control variables of firm size and leverage were considered in this study. After analysing the results via STATA using descriptive and inferential statistics, including Panel Data Regression model, the findings indicate a negative relationship existed between board size and financial performance. Likewise, the relationships between board independence and board interlocking and financial performance were significantly negative. Nevertheless, this research did not find statistically significant evidence to conclude a relationship existed between board meetings and financial performance.