The effect of board composition and managerial pay on Saudi firm performance

Abstract Using five empirical methodologies to account for endogeneity issues, this study investigates the effects of board independence and managerial pay on performance 169 Saudi listed firms between 2007 end 2014. Studying utilises main internal governance mechanism in relation firm performance; therefore, effect 2009 exogenous regulatory shock was also examined learn whether it impacted performance. The results show that composition–performance relationship is endogenous. Strong evidence found through dynamic generalised method moments estimation, which indicates composition has a positive with return assets, poor past negative impact current level difference-in-differences approach composition, stock returns, Tobin’s Q. findings reveal performance, although when considered, there smaller decrease significance levels. Thus, pay-for-performance Arabia matters, are not simply controlled by government. have implications both policy makers investors. In particular, regulators can evaluate corporate arrangements and, so doing, highlight changes need be made achieve their economic objectives , such as Vision 2030 . This contributes literature showing importance considering studies.