Impact of Corporate Governance on Financial Risk of Omani Non-financial Companies Listed on the Muscat Securities Market

1Almuatasim Musabah Saif Al Mutairi and Noraina Mazuin Sapuan

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Abstract:

Purpose: Corporate governance and financial risk have been researched extensively especially after the 2008 global financial crisis. The emergence of corporate governance as key area of focus in various fields of research such as management, economics, law and business are due to corporate failures and scandals. Hence, this paper seeks to investigate whether corporate mechanisms have significant impact on non-financial companies, particularly those listed on Omani’s Muscat Securities Market. Design/methodology/approach: This study uses characteristics of corporate governance to investigate the financial risk activities of 116 companies listed on the Muscat Securities Market. The characteristics to be used as the independent variables (IV) are the companies’ board composition and size, ownership concentration, regulatory compliance, executive compensation and information disclosure. The IVs will be used to examine whether corporate governance directly affects the dependent variables financial and investors’ perspective risks when moderated by firm’s profitability, size and risk management control. To test these variables, Generalized Method of Moments (GMM) for data analysis will be used as it allows equitable and reliable approximations whilst establishing corporate governance’s link between with financial risk. Findings: Findings from this study is hoped to fill the knowledge gap on corporate governance and financial risks among non-financial institutions in Omani context. Practical Implications: Finance and making investment-related decisions whilst managing risk are strongly correlated. It is believed that the effectiveness of corporate governance process reduces risk with the purpose of benefitting leadership and ethical codes of conduct.

Keywords:

Corporate Governance, Non-financial Institutions, Oman, Muscat Securities Market

Paper Details
Month2
Year2020
Volume24
IssueIssue 2
Pages2121-2127