The mediating role of firm risk: The case of the insurance sector in Saudi Arabia

Shanar Shafi Alsuyayfi, Roslan Ja'Afar, Rasidah Mohd Said and Ali Albada
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Shanar Shafi Alsuyayfi: PhD student, UKM Graduate School of Business, Universiti Kebangsaan, Malaysia
Roslan Ja'Afar: UKM Graduate School of Business, Universiti Kebangsaan, Malaysia
Rasidah Mohd Said: UKM Graduate School of Business, Universiti Kebangsaan, Malaysia
Ali Albada: Faculty of Business, Sohar University, Oman

Journal of Risk Management in Financial Institutions, 2023, vol. 17, issue 1, 106-116

Abstract: This study aims to examine the mediating effect of firm risk on the relationships between board structure and firm performance. The multivariate panel data regression technique is employed to analyse the mediating impact of firm risk on 27 listed insurance companies on the Saudi Stock Exchange (Tadawul) from 2016 to 2021. The findings of this study indicate that firm risk partially mediates the relationship between audit independence and Tobin's Q. In contrast to the existing literature, the study reveals that boards composed of independent members may lack effectiveness in their monitoring role, leading to higher risk-taking behaviour. This paper contributes to the literature on corporate governance and firm performance by examining the association through the lens of firm risk.

Keywords: firm risk; board structure; mediation; insurance sector; Saudi Arabia (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2023:v:17:i:1:p:106-116

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