Effects of chairman Ownership on financing decisions: empirical evidence from GCC

Hamada Elsaid Elmaasrawy, Omar Ikbal Tawfik, Khaled Hussainey

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Purpose: This study aims to examine the impacts of board chairman characteristics on the decision to finance with debts.

Design/methodology/approach: Based on historical data from 173 active nonfinancial firms listed on Gulf Cooperation Council (GCC) Stock Exchange Markets during 2012–2019, this research uses ordinary least squares (OLS) and dynamic system-generalized methods of moments to test its hypotheses. The final dataset comprises 1,384 firm-year observations from 10 major nonfinancial industry classifications.

Findings: Results indicate a negative impact of board chairman ownership on the decision to finance with retained earnings (RE). Negative effects of the chairman and chief executive officer (CEO) from the same family on the decision to finance with RE, whereas positive effects of the chairman and CEO from the same family on the decision to finance with debts are observed. In addition, a negative effect of the chairman from a royal family on the decision to invest with debts is found.

Research limitations/implications: Many board chairmen characteristics, such as age, gender, experience, education level, periodic change and ethnicity, are unaddressed. Financial decisions (FDs) are also limited to two decisions (internal financing with RE and external financing with debts).

Practical implications: Findings of this study provide an improved understanding of the role of chairman characteristics in FDs in GCC. Investors and lenders dealing with companies in GCC markets benefit from the authors' results because of the effects of chairman characteristics on FDs when making investment decisions in company stocks.

Originality/value: The study clarifies how each of the three board chairman characteristics (i.e. chairman ownership, chairman and CEO from the same family and the chairman from the royal family) affects FDs, especially the decisions to finance with debts and RE.
Original languageEnglish
Number of pages26
JournalJournal of Risk Finance
Early online date19 Sept 2023
Publication statusEarly online - 19 Sept 2023


  • chairman characteristics
  • financing decisions
  • internal financing
  • external financing
  • royal ownership
  • GCC

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