The impact of internal governance mechanisms on the value of publicly traded commercial banks: A case study of some listed banks in the Gulf countries.

The impact of internal governance mechanisms on the value of publicly traded commercial banks .

Abstract

This study aimed to measure the impact of internal governance mechanisms on the value of publicly traded commercial banks in the GCC countries. To achieve this objective, multiple linear regression was employed, utilizing corrected standard error estimates (PCSEs), based on annual data from a sample of 17 banks covering the period from 2011 to 2020. Internal governance mechanisms were represented by the characteristics of the board of directors, namely its size, the number of its meetings, and its degree of independence, as well as the characteristics of its subcommittees, including the number of committees, the number of their meetings, and the number of audit committee members. Conversely, the value of the banks was measured using Tobin's Q index as the dependent variable, reflecting the value of the bank's external financial performance. The study's findings underscore the pivotal importance of certain internal governance mechanisms in enhancing the value of publicly traded commercial banks. It is worth noting that both the number of board meetings and its independence have a positive impact on the value of these banks, while the number of committees and the number of their meetings have a significant negative impact on the same index. Accordingly, the results indicate that the value of banks is significantly affected by some internal governance mechanisms.