ROYAL FAMILY MEMBERS AND FIRM PERFORMANCE: EVIDENCE FROM KINGDOM OF SAUDI ARABIA

Abdullah Mohammed Alzahrani and Ayoib Che-Ahmad

Accounting & Taxation, 2015, vol. 7, issue 2, 29-42

Abstract: This study examines the relationship between Royal family members on the board of directors and firm performance of 573 publicly listed in the Saudi Stock Exchange (Tadawul) during 2007-2011 periods. This study utilizes two measurements of the firm performance: (1) Tobin’s Q and (2) ROE. Using the WLS, the result of this study shows that the existence of Royal family members on the board of Saudi-listed companies is significantly associated with firm performance. This study provides evidence on the role played by Royal family members in reducing agency conflicts and information asymmetries in Saudi Arabia where firms may be influenced by the cultural issues related to political ties and family involvement. The result of this study contributes to the existing theory and empirical evidence of how Royal family members add value to the firm. It offers policy-makers additional evidence on the positive impact of Royal family members on firm performance.

Keywords: Tobin’s Q; ROE; Royal Family Members on the Board; Saudi Arabia (search for similar items in EconPapers)
JEL-codes: M48 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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