Corporate governance and firm performance : an empirical evidence from Syria

Purpose: This study aims to examine the impact of aggregate and individual corporate governance provisions on firm performance on all firms listed at Damascus Securities Exchange (DSE) for the period between 2011 and 2015. In addition, it disentangles ownership structure provision to ownership concentration and foreign ownership and investigates which component of ownership structure stands behind the significance of ownership structure in explaining firm performance. Design/methodology/approach: The study uses multiple linear regression models to analyze the relationship between aggregate corporate governance index and its provisions and firm performance. A corporate governance index is built on the basis of four mechanics (i.e. board of directors, audit, disclosure and ownership structure) for all firms listed at DSE. On the other hand, the dependent variable (firm performance) is measured using Earnings Per Share (EPS) and Return On Assets (ROA). The authors capture current war conditions using political stability and absence of violence indicator, one of Worldwide Governance Indicators accumulated by the World bank. Findings: This study finds that ownership structure is the only significant corporate governance provision in determining Syrian firms’ performance, as it loads positively and significantly on firm performance proxies (ROA and EPS). Moreover, the analysis of ownership structure items shows that foreign ownership is the main source of this positive and significant impact. This result is robust for both measures of firm performance and in the presence of political stability indicator. Originality/value: This paper provides evidence on corporate governance measures from Syrian Arab Republic, a developing country with an emerging stock exchange. It examines board structure, ownership structure, audit committee and disclosure in a period of crisis because of the war in this country. Moreover, it uncovers that foreign ownership is the only influential provision affecting firm performance at DSE. Furthermore, it combines firm-level governance indicators with country governance indicator of political stability and absence of violence.