Board Effectiveness, Corporate Cash Holdings, and Financial Performance Across MENA Region

Hussien Mohsen (), Mohamed Marie (), Sherif El-Halaby () and Israa Elbendary ()
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Hussien Mohsen: Helwan University
Mohamed Marie: Cairo University
Sherif El-Halaby: Arab Open University
Israa Elbendary: Cairo University

A chapter in Contemporary Research in Accounting and Finance, 2022, pp 93-134 from Springer

Abstract: Abstract The purpose of this paper is to examine the impact of Board Effectiveness (BE) on corporate cash holdings (CH) and financial performance (FP) levels. It additionally investigates the impact of cash holdings on the FP. We used data for 106 banks across 13 countries in the MENA region for eight years, from 2010 to 2017. The empirical findings reveal that CH has a negative association with board independence as well gender diversity. While, our findings reveal a positive relationship with board size as well as CEO duality, but no linkage to board meetings. Our result shows an insignificant association between board effectiveness and FP. Finally, an empirical study indicates there is no relationship between cash holdings and FP. This study is constrained by including only IBs with neglected other IFIs. We also measure FP by existing accounting measures with neglected economics and future FP measures. We just focus on BOD characteristics, while the future investigation may include CG of SSB. The findings have implications for stockholders, regulators, and policyholders by determining which BE features can support decisions for holding cash to maximize stakeholders’ wealth. This study adds value for how board effectiveness can be treated as a mediator in determining the level of CH and FP for financial institutions as banks across the MENA region.

Keywords: Board effectiveness; Cash holdings; Financial performance and MENA countries (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-8267-4_4

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DOI: 10.1007/978-981-16-8267-4_4

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