Corporate Sustainability, Sustainable Governance, and Firm Value Efficiency: Evidence from Saudi Listed Companies

Hind Alofaysan, Sami Jarboui () and Jawaher Binsuwadan
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Hind Alofaysan: Department of Economics, College of Business Administration, Princess Nourah bint Abdulrahman University, Riyadh 11671, Saudi Arabia
Sami Jarboui: Department of Business Administration, College of Science and Humanities, Shaqra University, Al Quwayiyah 19257, Saudi Arabia
Jawaher Binsuwadan: Department of Economics, College of Business Administration, Princess Nourah bint Abdulrahman University, Riyadh 11671, Saudi Arabia

Sustainability, 2024, vol. 16, issue 13, 1-17

Abstract: This study aims to explore the synergy between corporate sustainability and corporate sustainable governance and its effect on a listed firm’s value efficiency. This research studies the interaction of these two critical dimensions of modern business, highlighting their combined effects on the value of the firm. We analyze the effects of corporate sustainability and the interactions of sustainability proxy and corporate governance practices on the value of 45 Saudi listed companies measured by Tobin’s Q during the period 2014–2022 using the True Fixed Effect model. Our results reveal that the average firm value efficiency of listed Saudi firms over a 10-year period is 87%. Our findings reveal that the interaction of corporate sustainability proxy and size of the board, number of board meetings, and board independence improve corporate value efficiency, while the interaction between corporate sustainability and ownership concentration has a negative impact on corporate value efficiency. Our research results indicate that sustainability initiatives can yield favorable effects on a firm’s value efficiency.

Keywords: corporate sustainability; corporate governance practices; firms value; True Fixed Effect model; Tobin Q (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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