Leadership Structures and Financial Sector Performance: Evidence on Corporate Leadership and Supervisory Committees in the Gulf Region

Journal Article

2025

Published in: http://www.pertanika.upm.edu.my/pjssh/browse/regular-issue?article=JSSH-9495-20…

Leadership Structures and Financial Sector Performance

ABSTRACT
The expansion of the Saudi economy depends on the financial markets. This study examines the
relationship between corporate governance and the performance of financial institutions listed on the
Saudi Stock Exchange from 2013 to 2022 using Tobin’s Q framework and a social science lens. The
approach used in the study incorporates aggregated data from ten financial institutions and eleven
insurance companies. Structural Equation Modelling (SEM) is advised for evaluating how corporate
governance attributes influence the performance of Saudi financial institutions. Financial institution
performance, the dependent variable, is assessed using the return on assets (ROA) and Tobin’s Q.
Meanwhile, corporate governance factors serve as independent variables, encompassing various
board and audit committee characteristics, as well as the financial institution’s size (Bank-Insurer).
The results, derived through structural equation modelling (SEM), show that governance attributes
significantly shape outcomes. Notably, board size, director independence, and audit committee
structure are associated with adverse effects, whereas institutional size acts as a positive driver of
performance in the Saudi financial sector.
Keywords: Corporate governance, ROA, Saudi financial markets, structural equation modelling (SEM),
Tobin’s Q

• Publication Work Type: Research Paper
• Publisher Name: Pertanika Journal of Social Science & Humanities (SCOPUS & WoS Indexed)
• Volume Number: 33
• Issue Number: 6
• Pages: 2549-2568