Dynamic relationship between ownership structure and financial performance: a Saudi experience

Bazhair, Ayman Hassan; Alshareef, Mohammed Naif Z

doi:10.1080/23311975.2022.2098636

Cited by 11 publications

(5 citation statements)

References 84 publications

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“…These investigations have, however, mainly been performed within one industry or using simple industry dummies across industries. Studies have focused on the statistical and economic significance of estimated coefficients but not on the reasons for the difference in leverage, which goes beyond such an analysis, in cases where single industries have not been examined, such as construction (Ruckova and Skulanova 2022), tourism (Athari and Bahreini 2023), manufacturing (Sardo et al 2022), the financial sector (Boateng et al 2022), and the non-financial sector (Bazhair and Alshareef 2022;Khan et al 2023). On the contrary, Yang et al (2015) concluded that almost all the studies carried out in China regarding debt examinations do not recognize differences among business sectors.…”

Section: Resultsmentioning

confidence: 99%

The Relevance of Sectoral Clustering in Corporate Debt Policy: The Case Study of Slovak Enterprises

Gajdosikova,

Valaskova,

Lazaroiu

2024

Administrative Sciences

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The processing and transformation of natural resources into completed and semi-finished products is the primary function of industry in each nation’s economy. There is no denying the significance of industry and sectoral classification of the economy, but the slow development and extension of one industry could have resulted in the advancement of other sectors that are now a part of contemporary communities. Since there are statistically significant differences between various industries, numerous authors are currently investigating the impact of the industry on the financial structure of firms, revealing the industry as a crucial determinant of corporate indebtedness. Thus, the main aim of this study is to determine the debt level of a sample of 4237 enterprises operating in the market in the period of 2018–2021 from various sectors using eight debt indicators, as well as to identify relationships between them, which may help to reveal sectors with homogeneous patterns of indebtedness (using the cluster analysis) and thus understand which sectors are the most stable and independent. The Kruskal–Wallis test is then used to determine if there are statistically significant differences between the calculated ratios related to the economic sector. Based on the results, it can be concluded that the choice of financial structure is significantly influenced by the industry. Financial performance and indebtedness indicators are quantitative statistics used to assess, monitor, and forecast company or sectoral financial health. They act as instruments for business insiders and outsiders to assess a company’s performance, particularly in comparison to competitors, and to pinpoint its strengths and weaknesses, making the outputs of this study important for all types of stakeholders.

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Section: Resultsmentioning

confidence: 99%

The Relevance of Sectoral Clustering in Corporate Debt Policy: The Case Study of Slovak Enterprises

Gajdosikova,

Valaskova,

Lazaroiu

2024

Administrative Sciences

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“…This study exploited a secondary data collection source by utilizing the sampled firms’ annual reports and accounts covering the period from 2010 to 2019 (Bazhair & Alshareef, 2022). The paper developed some filters to generate the requisite data for analysis: firstly, financial firms’ capital structure composition is substantially different (Rajan & Zingales, 1995).…”

Section: Methodsmentioning

confidence: 99%

Board Governance Mechanisms and Capital Structure of Saudi Non-Financial Listed Firms: A Dynamic Panel Analysis

Bazhair

2023

SAGE Open

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The dynamic trade-off model emphasizes that random shocks and other constraints may force firms to deviate from their optimum debt ratio. In addition, firms must incur adjustment costs for them to revert to their target level due to market frictions. However, prior literature in Saudi does not consider the effect of adjustment costs in determining how board governance mechanisms influence capital structure. By exploiting the generalized method of moments framework (GMM), this study analyzed the balanced panel of 100 Saudi non-financial listed firms covering the period from 2010 to 2019. The research found that Saudi firms observed a dynamic adjustment to attain their target leverage at 30.46% annually. Besides that, findings from the present study equally indicate strongly that board size and CEO tenure are negatively associated with leverage. There is also strong evidence that Saudi firms with a substantial number of independent directors pursue a more levered capital structure. Gender diversity appears insignificant in predicting the firms’ target debt ratio. Consequently, the Saudi board of directors and firms’ managers should consider the adjustment costs and other market frictions when designing the optimum debt-equity ratio.

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“…In this case, SOEs appear to have dispersed 'absent owners' as well as poor agents who have multiple objectives (Wong, 2004, p. 8). Studies in certain developing nations have shown a positive association between government ownership and enterprise value, defying the notion of the agency theory that increased government ownership would increase agency costs (Bazhair & Alshareef, 2022;Nguyen et al, 2015;Rakhman, 2018). Recent research on ownership structure has concentrated on SOE legal form improvements as a tactic to enhance the performance of these organisations while they are owned by the state (World Bank, 2014).…”

Section: Ownership Structure and Performancementioning

confidence: 99%

Corporate governance and performance of state-owned enterprises in a least developed economy

Kaunda,

Pelser

2023

South African Journal of Business Management

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The main objective of the study was to investigate how corporate governance affects the performance of state-owned enterprises (SOEs) in a least developed economy.Design/methodology/approach: Both primary and secondary data from nine state-owned companies that operated between 2001 and 2016 were analysed in the study. The investigation used a quantitative methodology. Fixed effects, random effects and generalised method of moments (GMM) estimations were used to conduct regression analysis.Findings/results: The findings show that corporate governance characteristics affect SOE performance in a least developed economy. The performance of SOEs is influenced favourably by board structures, director tenure, reduced government ownership and leverage. Conversely, increased state ownership leads to subpar performance. The study also reveals that the presence of civil servants and directors with political affiliations in government-controlled companies has a negative effect on enterprise value.Practical implications: The use of multiple case studies to investigate SOEs in their natural setting has given some insights for both professional managers and policymakers interested in developing corporate governance frameworks to improve SOEs value in least developed economies, particularly in sub-Saharan Africa, even though the results are limited in terms of statistical generalisation because the study was based on a single country.Originality/value: The study fills a gap in the literature about how SOE performance is affected by corporate governance in least developed nations, where such research is underdeveloped.

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Dynamic relationship between ownership structure and financial performance: a Saudi experience

Cited by 11 publications

References 84 publications

The Relevance of Sectoral Clustering in Corporate Debt Policy: The Case Study of Slovak Enterprises

The Relevance of Sectoral Clustering in Corporate Debt Policy: The Case Study of Slovak Enterprises

Board Governance Mechanisms and Capital Structure of Saudi Non-Financial Listed Firms: A Dynamic Panel Analysis

Corporate governance and performance of state-owned enterprises in a least developed economy

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