TY - JOUR
T1 - Corporate governance and stock price performance of firms during the crisis
T2 - Evidence from the MENA region
AU - Farooq, Omar
AU - Chetioui, Youssef
PY - 2012
Y1 - 2012
N2 - This paper examines the impact of corporate governance mechanisms on stock price performance of firms in the MENA region, i.e. Morocco, Egypt, Saudi Arabia, United Arab Emirates, Jordan, Kuwait, and Bahrain, during the recent financial crisis. Using dividend policy, choice of auditors, and transactional complexity as proxies for corporate governance, we document better stock price performance for firms with superior governance mechanisms. Our results show that firms with one of the big-four auditors, firms paying dividends, and firms with lower transactional complexity are associated with superior stock price performance. We argue that lower agency problems that accompany firms with better corporate governance mechanisms make it hard for controlling shareholders to expropriate, thereby improving stock price performance. Our results are important in a way that they highlight the power that individual firms have in resisting adversities of financial crisis.
AB - This paper examines the impact of corporate governance mechanisms on stock price performance of firms in the MENA region, i.e. Morocco, Egypt, Saudi Arabia, United Arab Emirates, Jordan, Kuwait, and Bahrain, during the recent financial crisis. Using dividend policy, choice of auditors, and transactional complexity as proxies for corporate governance, we document better stock price performance for firms with superior governance mechanisms. Our results show that firms with one of the big-four auditors, firms paying dividends, and firms with lower transactional complexity are associated with superior stock price performance. We argue that lower agency problems that accompany firms with better corporate governance mechanisms make it hard for controlling shareholders to expropriate, thereby improving stock price performance. Our results are important in a way that they highlight the power that individual firms have in resisting adversities of financial crisis.
UR - http://www.scopus.com/inward/record.url?scp=84871867953&partnerID=8YFLogxK
U2 - 10.1504/IJBGE.2012.051226
DO - 10.1504/IJBGE.2012.051226
M3 - Journal article
SN - 1477-9048
VL - 7
SP - 331
EP - 349
JO - International Journal of Business Governance and Ethics
JF - International Journal of Business Governance and Ethics
IS - 4
ER -