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Board of Directors, Audit Committee Characteristics and Performance of Saudi Arabia Listed Companies

Author

Listed:
  • Yahya Ali Al-Matari

    (Faculty of Accountancy, Universiti Utara Malaysia, Malaysia.)

  • Abdullah Kaid Al-Swidi

    (College of Arts & Sciences, Universiti Utara Malaysia, Malaysia)

  • Faudziah Hanim Bt Fadzil

    (Faculty of Accountancy, Universiti Utara Malaysia, Malaysia)

  • Ebrahim Mohammed Al-Matari

    (Faculty of Accountancy, Universiti Utara Malaysia, Malaysia)

Abstract

This study examines the relationship between the internal corporate governance mechanism related to the board of directors, the audit committee characteristics and the performance of the Saudi companies listed in the Saudi stock exchange (TADAWL) in 2010, excluding financial companies. The statistical results of the study are not in line with the agency theory that board of directors and audit committee might mitigate agency problems leading to reduced agency cost by aligning the interests of controlling owners with those of the company. While audit Committee size (ACSIZE) is found to have a significant relationship with firm performance (but in the opposite direction to expectation), other hypothesized variables, the proportion of non-executive directors (BODCOM), CEO Duality (DUAL), Board Size (BSIZE), Audit Committee Independence (ACIND), audit committee meeting (ACMEET) were found to be as expected directions but insignificantly related to firm performance measure except the direction of the proportion of non-executive directors (BODCOM) was opposite to the expectations.

Suggested Citation

  • Yahya Ali Al-Matari & Abdullah Kaid Al-Swidi & Faudziah Hanim Bt Fadzil & Ebrahim Mohammed Al-Matari, 2012. "Board of Directors, Audit Committee Characteristics and Performance of Saudi Arabia Listed Companies," International Review of Management and Marketing, Econjournals, vol. 2(4), pages 241-251.
    • Handle: RePEc:eco:journ3:2012-03-5
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    References listed on IDEAS

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    Cited by:

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    2. Al-Faryan, Mamdouh Abdulaziz Saleh, 2021. "The Effect of Board Composition and Managerial Pay on Saudi Firm Performance," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Online fi.
    3. Pillai, Rekha & Al-Malkawi, Husam-Aldin Nizar, 2018. "On the relationship between corporate governance and firm performance: Evidence from GCC countries," Research in International Business and Finance, Elsevier, vol. 44(C), pages 394-410.
    4. Pompei Mititean, 2022. "The Impact Of Corporate Governance Characteristics On Companies’ Financial Performance: Evidence From Romania," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(233), pages 113-134, April – J.
    5. Al-Faryan, Mamdouh Abdulaziz Saleh, 2020. "Corporate governance in Saudi Arabia: An overview of its evolution and recent trends," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 10(1), pages 23-36.
    6. Jehad S. Aldehayyat & Sliman S. Alsoboa & Mohammad H. Al-Kilani, 2017. "Investigating How Corporate Governance Affects Performance of Firm in Small Emerging Markets: An Empirical Analysis for Jordanian Manufacturing Firms," International Business Research, Canadian Center of Science and Education, vol. 10(1), pages 77-95, January.
    7. Al-Faryan, Mamdouh Abdulaziz Saleh, 2017. "The relationship between corporate governance mechanisms and the performance of Saudi listed firms," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 14(2-2), pages 338-349.
    8. Al-ahdal, Waleed M. & Alsamhi, Mohammed H. & Tabash, Mosab I. & Farhan, Najib H.S., 2020. "The impact of corporate governance on financial performance of Indian and GCC listed firms: An empirical investigation," Research in International Business and Finance, Elsevier, vol. 51(C).
    9. Robert Jao & Mediaty & Djabir Hamzah & Kevin Winar & Abdul Rakhman Laba, 2019. "The Effect of the Board of Commissioners and Audit Committees Effectiveness on Internet Financial Reporting," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(2), pages 37-48, April.
    10. Helmi A. Boshnak, 2021. "The Impact of Audit Committee Characteristics on Audit Quality: Evidence from Saudi Arabia," International Review of Management and Marketing, Econjournals, vol. 11(4), pages 1-12.
    11. Tamrin, Muhammad & Mus, H. Rahman & , Sudirman & Arfah, Aryati & Sjahruddin, Herman, 2017. "Effect of profitability and dividend policy on corporate governance and firm value: Evidence from the Indonesian manufacturing Sectors," OSF Preprints 7m9uk, Center for Open Science.
    12. Helmi A. Boshnak, 2021. "Corporate Governance Mechanisms and Firm Performance in Saudi Arabia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 446-465, May.
    13. Tamrin, Muhammad & Mus, H. Rahman & , Sudirman & Arfah, Aryati & Sjahruddin, Herman, 2018. "Effect of profitability and dividend policy on corporate governance and firm value: Evidence from the Indonesian manufacturing Sectors," INA-Rxiv 8bvw2, Center for Open Science.
    14. Dzung Viet Nguyen & Ngan Hoang-Kim Nguyen & Tien Thuy Dinh, 2023. "CEO attributes and firm performance: Evidence from companies listed on Ho Chi Minh Stock Exchange," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2282838-228, October.
    15. Laith A. Alaryan, 2017. "Exploring the Role of Board Characteristics on Enhancing Financial Performance of Jordanian Listed Companies," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(7), pages 99-105, July.
    16. Omer Saeed Habtoor, 2022. "Board Attributes and Bank Performance in Light of Saudi Corporate Governance Regulations," JRFM, MDPI, vol. 15(10), pages 1-27, September.
    17. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, December.
    18. Tamrin, Muhammad & Mus, H. Rahman & , Sudirman & Arfah, Aryati & Jamali, Hisnol, 2017. "Effect of profitability and dividend policy on corporate governance and firm value: Evidence from the Indonesian manufacturing Sectors," Thesis Commons sfjqc, Center for Open Science.
    19. Md Kamrul Islam & K. M. Shahriar Pervej & Younghwan Lee, 2022. "The impact of board characteristics on firm’s financial performance: A study on non-bank financial institutions of Bangladesh," International Journal of Science and Business, IJSAB International, vol. 12(1), pages 58-69.
    20. Vítor Pereira & José Filipe, 2014. "The Board’s Attributes and Their Influence in Company’s Performance. A Review over the Recent Literature," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 4(1), pages 691-691.
    21. repec:mth:ijafr8:v:8:y:2018:i:4:p:438-456 is not listed on IDEAS
    22. Abdul Hai Rathore & Abdullah Sahi, 2022. "The impact of Corporate Governance on voluntary disclosure of R&D expenditure of USA Pharmaceutical firms," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(2), pages 34-53, August.
    23. Md. Kamrul Islam & Sugandha Mobin Sharna, 2022. "Do board characteristics affect financial performance of firms? An empirical study on Dhaka Stock Exchange (DSE) listed Insurance Companies of Bangladesh," International Journal of Science and Business, IJSAB International, vol. 14(1), pages 1-10.

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    More about this item

    Keywords

    Corporate governance; Firm performance; Board of directors; Audit committee; Saudi Arabia.;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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