CORPORATE GOVERNANCE AND FIRMS STOCK RETURNS IN THE EMERGING MARKETDownload This Article
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This paper examines the relationship between corporate governance and firms’ performance (stock returns) in the emerging market. The paper fills the need for empirical evidence on governance issues in the scarce emerging markets compared to the developed world. Exploiting a unique dataset on the corporate governance index for the largest 90 companies listed on the Saudi stock market, we construct two portfolios. We compare the performance of good governed companies and poorly governed firms. We find that good governed portfolio outperforms the poor one. Nevertheless, regression results do not show any association between corporate governance score and performance. We interpret this as weak evidence for the link between corporate governance and firms’ performance.
Keywords: Corporate Governance, Corporate Governance Index, Stock Returns, Emerging Market
Authors’ individual contribution: Conceptualization – A.A. and S.A; Methodology – A.A. and S.A; Writing – A.A and S.A; Investigation – A.A and S.A; Funding – S.A; Resources – A.A.
JEL Classification: G34, L22
Published online: 24.09.2019
How to cite this paper: Alanazi, A. S., & Alhoqail, S. A. (2019). Corporate governance and firms stock returns in the emerging market. Risk Governance and Control: Financial Markets & Institutions, 9(3), 66-73. http://doi.org/10.22495/rgcv9i3p5