Please use this identifier to cite or link to this item: http://hdl.handle.net/1893/11087
Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Corporate Governance and Financing Decisions by Saudi Companies?
Authors: Al-Nodel, Ali
Hussainey, Khaled
Contact Email: khaled.hussainey@stir.ac.uk
Keywords: Corporate governance
financing decisions
emerging economies
Saudi Arabia
Issue Date: Aug-2010
Publisher: David Publishing
Citation: Al-Nodel A & Hussainey K (2010) Corporate Governance and Financing Decisions by Saudi Companies?, Journal of Modern Accounting and Auditing, 6 (8), pp. 1-14.
Abstract: 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.
Type: Journal Article
URI: http://hdl.handle.net/1893/11087
URL: http://www.davidpublishing.com/show.html?8700
Rights: Publisher allows this work to be made available in this repository. Published in Journal of Modern Accounting and Auditing, 6(8), pp.1-14, 08/2010 by David Publishing. The original publication is available at: http://www.davidpublishing.com/show.html?8700
Affiliation: Qassim University
Accounting and Finance

Files in This Item:
File Description SizeFormat 
Hussainey_JMAA_2010.pdf92.14 kBAdobe PDFView/Open


This item is protected by original copyright



Items in the Repository are protected by copyright, with all rights reserved, unless otherwise indicated.

If you believe that any material held in STORRE infringes copyright, please contact library@stir.ac.uk providing details and we will remove the Work from public display in STORRE and investigate your claim.