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Corporate governance effect on firms’ performance – evidence from the UAE

Author

Listed:
  • Ayda Farhan
  • Siti Normala Obaid
  • Hairul Azlan

Abstract

Purpose - The purpose of this paper is to show the effect of the corporate governance (CG) on firms’ performance in the United Arab Emirates (UAE). The governance mechanisms employed in this study are board size, board independence and audit committee’s (AC) characteristics. The examined AC characteristics are: AC member’s independence, number of financial experts in the committee, ratio of meetings held during the year, and the incentives received by the AC members. Design/methodology/approach - This paper uses all the public listed corporations in the UAE financial markets. The secondary data for four years are used starting from 2010 where the mandatory corporate governance code had been mandated. Findings - Board independence has been found to negatively affect firms’ performance. AC meetings and financial experts’ ratio did not affect firm’s performance, while AC incentives and AC independence negatively affected firms’ performance. Originality/value - This study is supposed to fill the gap of the lack in CG studies based on fast growing economy which is UAE. Besides, this research investigates the AC’s characters’ effect on firms’ performance which was rarely covered in literature.

Suggested Citation

  • Ayda Farhan & Siti Normala Obaid & Hairul Azlan, 2017. "Corporate governance effect on firms’ performance – evidence from the UAE," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 33(1), pages 66-80, May.
    • Handle: RePEc:eme:jeaspp:jeas-01-2016-0002
    DOI: 10.1108/JEAS-01-2016-0002
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    Citations

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    Cited by:

    1. Mohd Nor Zamry, Nur Syafinaz, 2019. "Corporate Governance and Its Determinants: A Study on Wells Fargo Scandal," MPRA Paper 93726, University Library of Munich, Germany.
    2. Mohammed Mahmud Kakanda, & Basariah Salim, & Sitraselvi Chandren,, 2017. "Do board characteristics and risk management disclosure have any effect on firm performance? Empirical evidence from Deposit Money Banks (DMBs) in Nigeria," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(4), pages 506-521, October.
    3. 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.
    4. Sitara Karim & Norlida Abdul Manab & Rusmawati Binti Ismail, 2019. "Legitimising the Role of Corporate Boards and Corporate Social Responsibility on the Performance of Malaysian Listed Companies," Indian Journal of Corporate Governance, , vol. 12(2), pages 125-141, December.

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