Corporate Governance and Performance in Egyptian Listed Companies

This paper aims to contribute the literature by examining the relation between corporate governance and performance in Egyptian listed companies, one of the emerging economies. Governance is measured as a multidimensional composite index comprised of board and ownership structure characteristics also the performance composite index comprised of ROA, ROE, and Tobin‟s Q. A sample of the most active non-financial companies the period 2009-2014, in which the final data has 240 firm-year observations was conducted to test the hypotheses. The results show that governance quality index has a high significant positive impact on firm performance index. Further, institutional ownership, private ownership, and ownership concentration have the strongest effects on all performance dimensions. Management ownership has an influence on accounting and market performance. The finding indicates a negative relation between board independence and performance. There might be factors/variables that affect the relation between corporate governance and performance that have not been identified in this study. Nevertheless, the specific factors/variables that used in this study have been used extensively in earlier studies. The results of this paper should be of interest to regulators, economists. Proponents of board independence should note with caution the negative relation between board independence and firm performance. Hence, if the purpose of board independence is to improve performance, then such efforts might be misguided. To the best of our knowledge, there is no study has yet empirically measure governance and performance as composite indexes in one of emerging economies, Egypt, or Middle Eastern countries.