Theory Versus Practice: Perspectives of Middle Eastern Financial Managers

Abstract

This paper reproduces a survey - previously applied in two different Continents, North America and Europe - to inquire about cost of capital, capital budgeting, capital structure, and corporate governance. The survey utilized in this article is Graham & Harvey's survey ( 2001) and its extended form employed by Brounen, Jong, and Koedijk (2004), which added two questions on corporate governance. We applied Brounen, de Jong and Koedijk extended form and we added one question on Islamic financial instruments. All firms analyzed are located in countries that abide by a mix of Islamic Law and secular Laws, mainly the French law and Common law. The sample firms were from Bahrain, Kuwait, Oman, and United Arab Emirates. Despite unique firms' characteristics and institutions, CFOs are acting roughly similar to their counter-parts in the U.S. and Europe.

Keywords: Corporate Finance, Middle East, Institutions, Survey

JEL Classification: G31, G32, G34, C42