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Does Ownership Structure Moderate the Relationship between Systemic Risk and Corporate Governance? Evidence from Gulf Cooperation Council Countries

Author

Listed:
  • Ilyes Abidi

    (Management Information Systems Department, Applied College, University of Ha’il, Ha’il P.O. Box 2240, Saudi Arabia)

  • Mariem Nsaibi

    (Management Information Systems Department, Applied College, University of Ha’il, Ha’il P.O. Box 2240, Saudi Arabia)

  • Khaled Hussainey

    (Faculty of Business and Law, University of Portsmouth, Portsmouth PO1 2UP, UK)

Abstract

The objective of this paper is to empirically examine the moderating effect of ownership structure on the relationship between systemic risk and corporate governance. It complements prior research by studying the relationship between the proportion of capital held by state institutions and systemic risk. It also examines the internal governance mechanisms that mitigate systemic risk. For this purpose, this research used a dataset consisting of 22 banks from Gulf Cooperation Council (GCC) countries (10 Islamic banks and 12 conventional banks) over the period 2004–2018. We used a three-stage least squares (3SLS) regression to test our research hypotheses. The findings revealed that the structure of the board of directors (BOD) reduced systemic risk in the banking sector. In particular, we provide evidence that board composition and board meetings negatively affect systematic risk. In addition, we provide empirical evidence that the state plays a key role in moderating the relationship between governance mechanisms and systemic risk. As such, our paper provides significant contributions to the governance and corporate finance literature.

Suggested Citation

  • Ilyes Abidi & Mariem Nsaibi & Khaled Hussainey, 2022. "Does Ownership Structure Moderate the Relationship between Systemic Risk and Corporate Governance? Evidence from Gulf Cooperation Council Countries," JRFM, MDPI, vol. 15(5), pages 1-17, May.
  • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:5:p:216-:d:814237
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    References listed on IDEAS

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    More about this item

    Keywords

    systemic risk; corporate governance; ownership structure; JEL Classification: G21; G28; G32;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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