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The effects of corporate governance on performance and financial distress The experience of UAE national banks

The effects of corporate governance on performance and financial distress The experience of UAE... Purpose – The purpose of this paper is to investigate the UAE national banks' practices of corporate governance (CG) and the perception of the UAE national banks of the effects of CG on performance and financial distress. Design/methodology/approach – A modified questionnaire has been developed, divided into two parts. The first part covers disclosure and transparency, executive compensation, relationship with shareholders, governance structure, policies and compliance, relationship with stakeholders, and board of directors. The second part deals with performance and financial distress. Findings – The results indicate that UAE banks are aware of the importance of disclosure transparency, executive compensation, the relationship with shareholders and stakeholders, and the role of the board of directors. The results also indicate that the corporate governance practices of UAE national banks are acceptable. In addition, the results reveal that there is a significant positive relationship between CG practices of UAE national banks and disclosure and transparency, shareholders' interests, stakeholders' interests, and the role of the board of directors. Furthermore, the results indicate that there is an insignificant positive relationship between CG practices of UAE national banks and performance level, and that there is a significant positive relationship between financial distress and CG practices of UAE national banks. Finally, the study found that there is no significant difference in the level of CG practices between the UAE's national conventional banks and its Islamic banks. Originality/value – The current study is considered the first of its kind conducted on the UAE. To the best of the author's knowledge, no such studies have been conducted regarding the effect of CG on performance and financial distress of UAE national conventional and Islamic banks. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Regulation and Compliance Emerald Publishing

The effects of corporate governance on performance and financial distress The experience of UAE national banks

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Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
1358-1988
DOI
10.1108/13581981211218315
Publisher site
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Abstract

Purpose – The purpose of this paper is to investigate the UAE national banks' practices of corporate governance (CG) and the perception of the UAE national banks of the effects of CG on performance and financial distress. Design/methodology/approach – A modified questionnaire has been developed, divided into two parts. The first part covers disclosure and transparency, executive compensation, relationship with shareholders, governance structure, policies and compliance, relationship with stakeholders, and board of directors. The second part deals with performance and financial distress. Findings – The results indicate that UAE banks are aware of the importance of disclosure transparency, executive compensation, the relationship with shareholders and stakeholders, and the role of the board of directors. The results also indicate that the corporate governance practices of UAE national banks are acceptable. In addition, the results reveal that there is a significant positive relationship between CG practices of UAE national banks and disclosure and transparency, shareholders' interests, stakeholders' interests, and the role of the board of directors. Furthermore, the results indicate that there is an insignificant positive relationship between CG practices of UAE national banks and performance level, and that there is a significant positive relationship between financial distress and CG practices of UAE national banks. Finally, the study found that there is no significant difference in the level of CG practices between the UAE's national conventional banks and its Islamic banks. Originality/value – The current study is considered the first of its kind conducted on the UAE. To the best of the author's knowledge, no such studies have been conducted regarding the effect of CG on performance and financial distress of UAE national conventional and Islamic banks.

Journal

Journal of Financial Regulation and Compliance – Emerald Publishing

Published: May 4, 2012

Keywords: United Arab Emirates; Banks; Corporate governance; Organizational performance; Financial distress

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