Corporate Governance during the Financial Crisis: Evidence from the United Arab Emirates (UAE)
41 Pages Posted: 15 Aug 2018 Last revised: 27 Jan 2020
Date Written: June 22, 2018
Abstract
This study evaluates corporate governance practices of listed firms in the UAE and investigates whether corporate governance mitigates/exacerbates the impact of leverage and risk on firm performance during crisis and non-crisis times. The study constructs a corporate governance index not only to examine the dispute of the role of corporate governance during the crisis, but also its influence on other factors that fuelled the crisis. A firm-level panel data is used that spans the period 2008 to 2012 of all listed firms on ADX and DFM. The study finds a positive influence of corporate governance strength on the accounting performance, but a negative influence on the firms’ economic performance. In normal times, corporate governance mitigates the negative influence of leverage and risk on the accounting and economic firm performance. However, this synergy effect varies across performance indicators during crisis.
Keywords: Risk; Leverage; Corporate Governance Index; Firm Performance; UAE
JEL Classification: G30; G38; G39; G18; D81
Suggested Citation: Suggested Citation