International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies

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:: International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies

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ISSN 2228-9860
eISSN 1906-9642
CODEN: ITJEA8


FEATURE PEER-REVIEWED ARTICLE

Vol.12(12) (2021)

  • Effects of Board Size and Board Composition on Firms' Financial Performance in Saudi Arabia

    Azzam Ibarhim Alhejji (Department of Business Administration, Shaqra University, SAUDI ARABIA),
    Arsalan Tauqir Khawaja (Business School, The University of Wolverhampton, Wolverhampton, UK).

    Disciplinary: Corporate Governance, Business Management.

    ➤ FullText

    doi: 10.14456/ITJEMAST.2021.251

    Keywords: Corporate Governance; Agency Theory; Stewardship Theory; Non-Executive Directors; Financial Performance; Stakeholder Theory; Board's Size; Non-Executive Director; return on assets (ROA) and earnings per share (EPS).

    Abstract
    This paper investigates the impact of board structure on the firms' performance in Saudi Arabia. The variables which measure the corporate governance structure are the board composition, and board size using regression-based analysis. The sample of study covered all listed firms in Tadawul i.e., 159 firms listed in the Saudi Stock Exchange. This study's findings demonstrate that non-executive directors have a positive effect on all measurements of financial performance, indicating that the higher the percentage of non-executive directors, the more improved the process of independent decision-making is, which overflows into the firm's performance overall. This shows that higher numbers of non-executive board members resulted in improved and more effective decision making, thus impacting positively on the performance of the board and thus, overall company performance also. These findings are in line with agency theory. Moreover, these results complement agency theory. Lastly, the size of the board was identified to have a positive and significant impact on the performance of the company.

    Paper ID: 12A12T

    Cite this article:

    Alhejji, A. I. and Khawaja, A. T. (2021). Effects of Board Size and Board Composition on Firms' Financial Performance in Saudi Arabia. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies, 12(12), 12A12T, 1-11. http://doi.org/10.14456/ITJEMAST.2021.251



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Other issues:
Vol.12(13)(2021)
Vol.12(11)(2021)
Vol.12(10)(2021)
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