Title: Board of directors and financial performance in the Middle East

Authors: Charbel Salloum; Elie Bouri; Christophe Schmitt

Addresses: USEK School of Business, Holy Spirit University of Kaslik, P.O. Box 446, Lebanon ' USEK School of Business, Holy Spirit University of Kaslik, P.O. Box 446, Lebanon ' Lorraine University, 34 cours Léopold, CS 25233, 54052 Nancy Cedex, France

Abstract: This study seeks to trace dimensions through which corporate governance characteristics influence the financial performance of family owned businesses. Between the periods of 2009-2011, we examined 160 Lebanese family owned firms that were equally divided between a control and an experimental group. Using a multiple logistic regression between a proxy ratio of financial distress and three exogenous variables of corporate governance, we found evidence of the attribute of boards' composition to firm's failure; the presence of outside directors seemed to have no role in the financial distress and insider ownership decrease the likelihood of financial distress but CEO duality increases the same probability of family owned firms in Lebanon. Our findings may well urge Lebanese investors and regulators toward the implementation of governance practices, to enhance the performance in one of the pillars of every local economy.

Keywords: board of directors; corporate governance; family businesses; financial distress; financial performance; Middle East; Lebanon; family firms; investors; regulators.

DOI: 10.1504/IJBPM.2013.054928

International Journal of Business Performance Management, 2013 Vol.14 No.3, pp.274 - 292

Received: 22 Oct 2012
Accepted: 07 Dec 2012

Published online: 28 Nov 2013 *

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