Corporate governance and firm performance
: the case of Kuwait

  • Mejbel Al Saidi

Student thesis: Doctoral Thesis


Scholars have argued that well-governed firms achieve better firm performance. This study addresses the question of whether a relationship exists between corporate governance mechanisms and the performance of non-financial firms listed on the Kuwait Stock Exchange (KSE). The study combines quantitative (OLS panel regression analysis) and qualitative (interviews) methods. Such triangulation will improve the understanding of the underlying process.
The quantitative data produced mixed results. According to the OLS regressions, some governance mechanisms (e.g., non-executive directors, family members on boards, and dividends) positively relate to firm performance value while debt and ownership concentration (based on ROA only) negatively relate to firm performance. However, when the governance mechanisms are treated endogenously using 2SLS regression, based on both measures (Tobin‘s Q and ROA), several corporate governance principles, such as board size and role duality, have no relationship with firm performance whereas dividends and family directors positively impact firm performance. However, the ownership concentration, proportion of non-executive directors, and debt produced mixed results. The Hausman test provides evidence that the governance mechanisms are endogenous. In addition, if any causal relationship does exist, it would be from the governance mechanism structure to firm performance.
The main findings of the qualitative data are similar. A significant change has emerged in Kuwaiti trends related to corporate governance, yet the current corporate governance principles
in Kuwait are perceived as irrelevant. Ownership structure provides minority  shareholders with weak rights. Meanwhile, family members on boards and role duality produce mixed views. However, other board variables such as the proportion of non-executive directors and board size are not effective. Finally, high dividends mean high firm performance while high debt leads to financial risks and problems with limited roles for Kuwaiti banks in monitoring.
Date of AwardDec 2010
Original languageEnglish
Awarding Institution
  • University of Portsmouth
SupervisorMike Page (Supervisor)

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