Al-Nodel, Ali and Hussainey, Khaled (2010) Corporate governance and financing decisions by Saudi companies?’. Journal of Modern Accounting and Auditing, 6 (8 SRC). pp. 1-14. ISSN 1548-6583Full text not available from this repository.
Purpose: This paper aims to contribute to the corporate governance literature in emerging economies by examining the effect of some corporate governance mechanisms on financing decisions in Saudi Arabian listed companies. Methodology: A multiple regression model is used to examine the association between financing decisions and corporate governance mechanisms for a sample of 37 listed Saudi companies. In particular, we examine the effect of board size; ownership concentration and corporate governance reporting on the debt-to-equity ratio. Corporate governance reporting is measured by the content analysis approach. Findings: After controlling for companies' profitability and their growth opportunities, we found that both board size and ownership concentration are positively associated with debt-to-equity ratio. Research limitations: We limit our analysis to a small sample of firms that use the internet to communicate corporate governance information between October 2005 and January 2006. Practical implications: The findings suggest that managers are likely to choose higher financial leverage when they have stronger corporate governance (large number of directors on the board and higher ownership concentration). However, we did not find any statistical association between corporate governance disclosure and debt-to-equity ratio. This suggests that firm’s asymmetric information is not an important driver of the financing decision of Saudi Arabian companies. This might be due to the nature of the Saudi business environment. Originality: We strongly believe that this paper provides a novel contribution to the existing literature as we are the first to examine this issue in Saudi Arabia.
|Uncontrolled Keywords:||Corporate governance financing decisions emerging economies Saudi Arabia|
|Subjects:||H Social Sciences > HG Finance
H Social Sciences > HG Finance > HG4001 Finance management. Business finance
|Divisions:||Faculty of Business, Computing and Applied Sciences > Business School > Accounting and Finance|
|Research Priority Areas:||Applied Business Research|
|Depositing User:||Ineke Tijsma|
|Date Deposited:||10 Mar 2015 15:16|
|Last Modified:||30 Aug 2016 08:35|