Research
The Impact of Ownership Structure on Firms Financial Performance – Evidence from Egyptian Listed Companies
This study examines internal corporate governance mechanisms in the Egyptian securities market, and aims to shed new light on understanding how the structure of internal governance mechanisms differs from that of the extensively studied governance mechanisms in developed countries. It investigates the impact of state ownership, private ownership, managerial ownership and employee association ownership on financial performance. The author tests the hypotheses on a sample of 70 Egyptian firms over a six-year period from 2005 to 2010. The sample includes the most Egyptian active firms (EGX 100) listed on the Egyptian stock exchange. To investigate the influence of ownership structure on performance, this study adopts the agency theory and the resource-based view to develop the hypotheses. The analysis shows the important role of private ownership and managerial ownership in firm performance. However, state ownership has provided inconsistent results with the two performance measures. For employee ownership, the inconsistency across the two performance measures can be justified by the positive investors’ perception about this type of ownership as it evolved as consequences of the privatisati on programme for state-owned companies. In conclusion, the findings of the study help stimulate further research into identifying the contingency conditions upon which ownership structure affect firm performance. The empirical results also have some managerial implications for reforming ownership structure.
The Impact of Board Characteristics on Firms Financial Performance – Evidence from the Egyptian Listed Companies
Board characteristics considered in this study include board size, presence of outside directors, CEO– Chairman duality and gender diversity on the board. Firm performance is measured by return on assets (ROA) and Tobin’s Q. This study includes firm age, firm size and industry type as control variables. The author tests the hypotheses on longitudinal sample of 70 firms over six-year period from 2005 until 2010. The sample includes the most active firms (EGX 100) on the Egyptian stock exchange. Empirical analysis is undertaken using pooled OLS and FGLS regressions after adopting the prerequisite tests and after detecting the absence of endogeneity between the variables. This study makes a number of contributions to the existing literature. First, it provides a better understanding of the overall picture of Egypt’s internal governance mechanisms. The findings also contribute to our understanding of how corporate governance in Arab countries is practised in general and in Egypt in particular. Second, an important finding about Egyptian firms is that in the presence of the non-mandatory code, the board of directors is not effective in implementing proper corporate governance practices. This view is supported by the low level of compliance and the weak legal system. Governance in Egyptian-listed firms is achieved spontaneously through other factors, such as ownership.
Employees Perception towards the implementation of Corporate Governance Principles: An Egyptian Perspective
The objective of this study is to examine how employees perceive corporate governance in their organisations and to explore the position that employees can take in the promotion of corporate governance in the Egyptian context. It empirically examines the employees’ perception towards corporate governance using a 5-point Likert-type questionnaire that was administered face to face and online. Despite the fact that some employees lack proper knowledge about the issues of corporate governance, the findings were encouraging as the majority of employees have emphasised its importance. The results of this study can be beneficial in developing a better understanding about corporate governance within different Egyptian institutions and in promoting the importance that employees can play in implementing governance.
