The Association between Board Size, Independence and Firm Performance: Evidence from Saudi Arabia
Keywords:
board size, board independence, firm performance, saudi nonfinancial listed firms
Abstract
This study examines the association between board size, independence and firm performance in Saudi nonfinancial listed firms. The sample consists of 329 firms during the period 2013 to 2015. Both between-and within-firms variation analysis are used to test the hypotheses. The study finds that neither board independence nor board size is linked to firm performance, but some evidence (from additional tests) supports the argument that nonexecutive members of the board of directors may lack real independence; in this case they would be both less effective and more costly for firms. Together, these findings are consistent with the view that business structure in Saudi Arabia is dominated by a tribal system that gives more attention to personal relationships instead of skill and competency in selecting member of the board of directors.
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2017-03-23
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