Impact of corporate governance structure on performance of listed firms: empirical evidence from Palestine

Abstract

Purpose

The purpose of this study is to investigate the influence of corporate governance structure corporate governance on a firm’s performance in the Palestinian business environment between 2016 and 2023. The specific environment of the developing Palestinian economy is the main motivation and emphasis of this investigation.

Design/methodology/approach

Data were gathered from 49 financial and non-financial firms listed on the Palestine Stock Exchange between 2016 and 2023. While the random and fixed effects estimates were utilized to be the most suitable for this particular investigation, they were used to undertake the data analysis procedure. The study employed two-stage least squares (2SLS) to assess the robustness and correctness of data to bolster the findings and subsequent implications.

Findings

The findings show that the return on equity, a measure of corporate performance, was positively but not significantly impacted by the presence of women on the executive boards of Palestinian companies. This suggests that the variable in question had no bearing on the success of the firms. In terms of moderating influence, corporate governance structure had no bearing on the link between dual chief executives, institution ownership, government ownership, independent directors and firm performance. Family ownership and board size had negative, significant impacts on performance.

Research limitations/implications

The research limitations of this study are that it focuses exclusively on manufacturing firms listed on the Palestine Exchange (PEX) over a seven-year period, which limits its generalizability to other industries and regions. Furthermore, due to a lack of data, the model did not account for global diversity on boards of directors.

Practical implications

The findings of this research help managers understand how management structures impact business success and provide regulatory authorities with insights into gender diversity and corporate governance legislation in Palestine. It suggests enhancing company performance, competitiveness and capital acquisition by improving governance information quality, building investor confidence, raising standards and reforming governance systems.

Originality/value

This study contributes to the literature by enhancing the understanding of how corporate governance and gender diversity affect the financial performance of listed firms, addressing a research gap in the Palestinian market. It is one of the few studies examining company performance during political turmoil, specifically focusing on the increased role of women on Palestinian boards.

Citation

Talalwa, M., Magableh, F. and Badwan, N. (2024), "Impact of corporate governance structure on performance of listed firms: empirical evidence from Palestine", Management & Sustainability: An Arab Review, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MSAR-06-2024-0040