Title: Corporate governance in Saudi Arabia: what happens to firm value when the board of directors and ownership structure interact?
Authors: Hanan Alhussayen; Ridha Shabou; Imed Medhioub; Durga Prasad Samontaray
Addresses: Department of Finance, College of Business Administration, King Saud University, Riyadh 11587, Saudi Arabia ' University of Sfax, Sfax, Tunisia ' Department of Finance and Investment, Imam Muhammad Ibn Saud Islamic University (IMSIU), Saudi Arabia ' Department of Finance, College of Business Administration, King Saud University, Riyadh 11587, Saudi Arabia
Abstract: The ownership structure can strengthen or weaken the monitoring functions of the board. Therefore, it is intended in this article to analyse how the complexity of the ownership structure affects the relationship between intensive board monitoring and firm value. The study covers all the firms listed in the Saudi stock market, except the firms listed in the banking and insurance sectors, over the period 2008 till 2013. The results of the analysis reveal that the direct ownership of large shareholders in non-complex structures and the joint ownership between the government and family owners and individual investors both complement the monitoring functions of the board. Further the indirect ownership of ultimate owners in complex structures weakens the board monitoring intensity.
Keywords: intensive board monitoring; IBM; agency theory; board of directors; ownership structure; board independence; direct ownership; indirect ownership; joint ownership.
International Journal of Business Innovation and Research, 2020 Vol.23 No.2, pp.205 - 249
Received: 28 Oct 2018
Accepted: 13 May 2019
Published online: 24 Sep 2020 *