The effects of corporate governance on performance and financial distress. The experience of UAE national banks
| Published date | 04 May 2012 |
| DOI | https://doi.org/10.1108/13581981211218315 |
| Date | 04 May 2012 |
| Pages | 169-181 |
| Author | Hussein A. Hassan Al‐Tamimi |
| Subject Matter | Accounting & finance |
The effects of corporate
governance on performance and
financial distress
The experience of UAE national banks
Hussein A. Hassan Al-Tamimi
Department of Accounting, Finance and Economics, University of Sharjah,
Sharjah, United Arab Emirates
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.
Keywords United Arab Emirates,Banks, Corporate governance, Organizational performance,
Financial distress
Paper type Research paper
Introduction
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 effect
of CG on performance and financial distress. This study attempts to answer the
question: are UAE banks aware of the importance of disclosure transparency,
executive compensations, the relationship with shareholders, stakeholders and the role
of board of directors? Also an attempt will be made to answer the question: are CG
practices of UAE banks within an acceptable level? Numerous studies have been
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
The author would like to thank the University of Sharjah for the research grant.
The effects of CG
on performance
169
Journal of Financial Regulation and
Compliance
Vol. 20 No. 2, 2012
pp. 169-181
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581981211218315
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