Rethinking governance: The nexus between non-financial and financial performance for GCC countries
Abstract/Description
Purpose
This study examines the direct effects of firms’ governance on financial, environmental and social performance and investigates how governance moderates the relationship between financial and non-financial performance.
Design/methodology/approach
We performed the panel data regressions using a sample of 207 listed firms from five GCC countries: Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates, over the period from 2015 to 2022.
Findings
Governance positively impacts financial, environmental, and social performance. Importantly, our results document a positive moderation effect of governance on the relationship between firm’s non-financial and financial performance, such that the firms’ environmental and social performance positively affect financial performance for firms with better governance.
Originality
This research is a first step in gauging the impacts of corporate governance for markets where business activities pose a significant amount of environmental risk in particular.
Practical implications
Strengthening corporate governance can provide direct financial benefits to firms while also improving the financial feasibility of their environmental and social initiatives. The findings of this research also hold value for policymakers and practitioners as it highlights the value of regulations and reforms in making business operations more sustainable.
Social implications
The findings of this research recommend enhancing governance in firms to improve the environmental and social initiatives that aspire to be in tune with the needs of the times.
Keywords
Governance, Environmental Performance, Social Performance, Financial Performance, Sustainability, Stakeholder Theory
Track
Finance
Session Number/Theme
Finance - Session II
Start Date/Time
13-6-2025 2:15 PM
End Date/Time
13-6-2025 3:55 PM
Location
MCC – 12 AMAN CED Building
Recommended Citation
Omer, M., & Tauseef, S. (2025). Rethinking governance: The nexus between non-financial and financial performance for GCC countries. IBA SBS 4th International Conference 2025. Retrieved from https://ir.iba.edu.pk/sbsic/2025/program/5
COinS
Rethinking governance: The nexus between non-financial and financial performance for GCC countries
MCC – 12 AMAN CED Building
Purpose
This study examines the direct effects of firms’ governance on financial, environmental and social performance and investigates how governance moderates the relationship between financial and non-financial performance.
Design/methodology/approach
We performed the panel data regressions using a sample of 207 listed firms from five GCC countries: Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates, over the period from 2015 to 2022.
Findings
Governance positively impacts financial, environmental, and social performance. Importantly, our results document a positive moderation effect of governance on the relationship between firm’s non-financial and financial performance, such that the firms’ environmental and social performance positively affect financial performance for firms with better governance.
Originality
This research is a first step in gauging the impacts of corporate governance for markets where business activities pose a significant amount of environmental risk in particular.
Practical implications
Strengthening corporate governance can provide direct financial benefits to firms while also improving the financial feasibility of their environmental and social initiatives. The findings of this research also hold value for policymakers and practitioners as it highlights the value of regulations and reforms in making business operations more sustainable.
Social implications
The findings of this research recommend enhancing governance in firms to improve the environmental and social initiatives that aspire to be in tune with the needs of the times.
