FACTORS ASSOCIATED WITH FIRM PERFORMANCE: EMPIRICAL EVIDENCE FROM THE KINGDOM OF SAUDI ARABIA

Abdullah Mohammed Alzharani, Ayoib Che-Ahmad and Khaled Salmen Aljaaidi

Accounting & Taxation, 2012, vol. 4, issue 2, 49-56

Abstract: This study investigates the relations between agency cost variables (firm size, leverage and auditor type) and the firm performance of 392 listed companies in the Saudi Stock Exchange (Tadawul) during 2007- 2010. This study identifies two measurements of the firm performance: (1) ROA and (2) ROE. Using the multiple regression, the results of this study show that the likelihood a firm performance (ROA) is significantly affected increases with the firm size. On the other hand, leverage and auditor type have no influence on the firm performance. Interestingly, the explanatory power of firm performance (ROA) model is high. Somewhat surprisingly, model (2)'s explanatory power is insignificant indicating to the inability of the proposed variables (firm size, leverage and auditor type) in explaining the expected effect on firm performance (ROE).

Keywords: ROA; ROE; Kingdom of Saudi Arabia (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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