Influence of Board Interlocking, Board Structure and Ownership Structure on the Financial Performance of Palestinian Corporations
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Date
2021-05-29
Authors
عنتري, لؤي صالح محمد
Journal Title
Journal ISSN
Volume Title
Publisher
An-Najah National University
Abstract
This thesis purpose is to examine the impact of ownership structure, board characteristics, and board interlocking on corporate financial performance of listed firms at Palestine exchange. The data was obtained through the manual examination of the annual reports of listed companies at the Palestinian Exchange (PEX) for the period from 2011 to 2018. Besides, the market value of the stocks listed in the market. The researcher investigated the entire listed corporations.
The thesis findings CEO duality, existence of women on the board, foreign ownership and corporate size has positive effect on ROA. However, frequency of board meetings, board size, number of interlocking, interlocking per board, institutional ownership, large ownership and corporate financial leverage have negative relationship with ROA. According to the Tobin`s Q there is positive effect for frequency of board meetings, number of interlocking, interlocking per board member, foreign ownership, institutional ownership and large ownership on corporate financial performance. However, there is negative effect for board size, CEO duality, women in the board, corporate financial leverage and corporate size on financial performance.
In terms of practical implications, this research demonstrated that companies should decrease the board interlocking by ensuring to supplement new board members who are not interconnected. There is a necessity to keep the size of the board to a minimum size as that will give the companies the potential and power to carry out their supervision activities efficiently. Furthermore, the board of directors should include professional and experts who have good experience, awareness and knowledge with the controlling and oversight duties and activities. Eventually, there is necessity to rationalize the number of board meetings. Besides, Capital Market Authority and the other supervisory organizations should set rules and regulations that decrease the large ownership and institutional ownership in Palestinian listed. Eventually, there is a necessity to adopt policies and laws that promote and encourage foreign ownership in listed companies at the Palestinian exchanges.