Journal of Management Information and Decision Sciences (Print ISSN: 1524-7252; Online ISSN: 1532-5806)


The Moderating Role of Audit Committee on the Relationship between Concentrated Ownership and Financial Performance: Evidence from MENA Countries

Author(s): Ayat Qasim Almasri & Nathasa Mazna Ramli

This study investigates the effect of concentrated ownership on financial performance. It also examines the moderating effect of the audit committee (financial experts) on the relationship between concentrated ownership and financial performance in MENA countries. The theoretical framework is based on agency theory. This study analyzes 1,932 firm-year observations of non- financial firms listed in nine MENA countries from 2014 to 2019. This study uses the panel data method. OLS, FEM, and system GMM estimators were used to analyze the data. The finding of this study showed that concentrated ownership has a significantly positive relationship with financial performance (ROE and MTBR). Furthermore, the audit committee (financial experts) plays a significant moderating role in the relationship between concentrated ownership and the financial performance of MENA firms. This study provides valuable insight into the impact of concentrated ownership as a corporate governance mechanism in MENA countries. The findings may assist investors, managers, and policymakers in MENA markets, as well as those in other emerging countries with similar environmental characteristics, in making their respective decisions. Additionally, they may be useful for regulators to revise and update corporate governance regulations to ensure the greatest possible oversight to attract more investments. In addition, this study provides new evidence within the context of MENA on the moderating role of the audit committee on the relationship between concentrated ownership and firm performance.

Get the App