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Royal Family Members And Firm Performance: Evidence From Kingdom Of Saudi Arabia

Author

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  • Abdullah Mohammed Alzahrani
  • Ayoib Che-Ahmad

Abstract

This study examines the relationship between Royal family members on the board of directors and firm performance of 573 publicly listed in the Saudi Stock Exchange (Tadawul) during 2007-2011 periods. This study utilizes two measurements of the firm performance: (1) Tobin’s Q and (2) ROE. Using the WLS, the result of this study shows that the existence of Royal family members on the board of Saudi-listed companies is significantly associated with firm performance. This study provides evidence on the role played by Royal family members in reducing agency conflicts and information asymmetries in Saudi Arabia where firms may be influenced by the cultural issues related to political ties and family involvement. The result of this study contributes to the existing theory and empirical evidence of how Royal family members add value to the firm. It offers policy-makers additional evidence on the positive impact of Royal family members on firm performance.

Suggested Citation

  • Abdullah Mohammed Alzahrani & Ayoib Che-Ahmad, 2015. "Royal Family Members And Firm Performance: Evidence From Kingdom Of Saudi Arabia," Accounting & Taxation, The Institute for Business and Finance Research, vol. 7(2), pages 29-42.
    • Handle: RePEc:ibf:acttax:v:7:y:2015:i:2:p:29-42
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    1. Mejbel Al-Saidi, 2020. "Kuwaiti Families and Firm Performance in Non-Financial Listed Firms," International Journal of Business and Social Research, LAR Center Press, vol. 10(3), pages 11-18, March.

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    More about this item

    Keywords

    Tobin’s Q; ROE; Royal Family Members on the Board; Saudi Arabia;
    All these keywords.

    JEL classification:

    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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