The Impact of Corporate Governance Practices on the Financial Performance of Companies Listed on the Muscat Stock Exchange in Oman: An Empirical Analysis

This study examines the impact of corporate governance practices on the financial performance of companies listed on the Muscat Stock Exchange (MSE) in Oman. The research focuses on key governance variables such as board size, board independence, audit committee effectiveness, and ownership structure. Financial performance is evaluated using indicators including Return on Assets (ROA), Return on Equity (ROE), and Earnings Per Share (EPS) over a five-year period (2019–2023). A quantitative methodology employing regression analysis is used to identify relationships between governance mechanisms and performance outcomes. The findings reveal a significant positive correlation between strong corporate governance and improved financial performance, particularly in companies with independent boards and active audit committees. The study underscores the importance of governance reforms in enhancing corporate accountability and investor confidence in Oman's capital market

Corporate Governance, Financial Performance, Muscat Stock Exchange, Board Independence

1. Ahmed, E. R., Alabdullah, T. T. Y., Shaharudin, M. S., & Putri, E. (2020). Further evidence on the link between firm's control mechanisms and firm financial performance: Sultanate of Oman. Journal of Governance and Integrity, 4(1), 20–31. [Google Scholar] [Crossref]

2. Al-Busaidi, M., & Al-Kharusi, S. (2021). The impact of board characteristics on firm performance: Evidence from Oman. International Journal of Accounting and Financial Reporting, 11(1), 1–18. https://doi.org/10.5296/ijafr.v11i1.18499 [Google Scholar] [Crossref]

3. Al-Busaidi, M. A., & Al-Kalbani, M. A. (2020). Corporate governance mechanisms and firm performance: Evidence from Oman. International Journal of Economics and Financial Issues, 10(2), 28–36 [Google Scholar] [Crossref]

4. Al-Hadi, A., Al-Yahyaee, K. H., & Al-Sartawi, A. (2016). Ownership structure and firm performance: Evidence from Oman. Australasian Accounting, Business and Finance Journal, 10(2), 54–75. https://doi.org/10.14453/aabfj.v10i2.4 [Google Scholar] [Crossref]

5. Al-Habsi, A. S., Singh, S., & Collins, G. (2017). Corporate governance and firm performance in Oman: Evidence from the MSM. International Journal of Economics and Financial Issues, 7(3), 568–575. [Google Scholar] [Crossref]

6. Al-Farsi, Y. M., Locke, S., & Chowdhury, K. (2012). Corporate governance in Oman: An analysis of the ownership structure. International Journal of Business and Management, 7(3), 207–219. [Google Scholar] [Crossref]

7. Aljifri, K., & Moustafa, M. (2007). The impact of corporate governance mechanisms on the performance of UAE firms. Journal of Economic and Administrative Sciences, 23(2), 71–93. https://doi.org/10.1108/10264116200700008 [Google Scholar] [Crossref]

8. Al Lawati, [Initials], & Kuruppu, [Initials]. (2023). Audit committee characteristics and sustainable development goals: evidence from Gulf Cooperation Council. Corporate Ownership and Control, 20(3), 305–316. [Google Scholar] [Crossref]

9. Al Lawati, [Initials], et al. (2021). Politically connected firms and forward-looking disclosure in the era of Oman Vision 2040. MDPI Finance. [Google Scholar] [Crossref]

10. Al Lawati, H., & Hussainey, K. (2020). Corporate governance and firm performance in Oman: Evidence from board diversity. Corporate Ownership and Control, 17(2), 146–155. https://doi.org/10.22495/cocv17i2art13 [Google Scholar] [Crossref]

11. Al Lawati, H., & Hussainey, K. (2020). Corporate governance and performance of non-financial firms: Evidence from Oman. Corporate Governance: The International Journal of Business in Society, 20(2), 324–339. [Google Scholar] [Crossref]

12. Al-Janadi, Y., Rahman, R. A., & Omar, N. H. (2013). Corporate governance mechanisms and voluntary disclosure in GCC countries. Asian Journal of Finance & Accounting, 5(1), 125–147. [Google Scholar] [Crossref]

13. Al-Kalbani, M., & Al Busaidi, M. (2019). Board characteristics and firm performance: Evidence from Muscat Securities Market. International Journal of Business and Management, 14(8), 183–195. [Google Scholar] [Crossref]

14. Al-Matari, E. M., Al-Swidi, A. K., & Fadzil, F. H. B. (2012). Corporate governance and performance of Saudi Arabia listed companies. British Journal of Arts and Social Sciences, 9(1), 1–30. [Google Scholar] [Crossref]

15. Al-Saidi, M., & Al-Shammari, B. (2013). Board composition and financial performance in Oman: An empirical study. Asian Economic and Financial Review, 3(3), 273–285. [Google Scholar] [Crossref]

16. Al-Malkawi, H. A. N., Pillai, R., & Bhatti, M. I. (2014). Corporate governance practices in emerging markets: The case of GCC countries. Economic Modelling, 38, 133–141. https://doi.org/10.1016/j.econmod.2013.12.019 [Google Scholar] [Crossref]

17. Al-Najjar, B. (2015). Corporate governance, audit quality and firm performance: Evidence from Oman. Journal of Applied Accounting Research, 16(2), 217–231. [Google Scholar] [Crossref]

18. Al-Shammari, B., & Al-Sultan, W. (2010). Corporate governance and voluntary disclosure in Kuwait. International Journal of Disclosure and Governance, 7(3), 262–280. [Google Scholar] [Crossref]

19. Bhagat, S., & Bolton, B. (2008). Corporate governance and firm performance. Journal of Corporate Finance, 14(3), 257–273. [Google Scholar] [Crossref]

20. Capital Market Authority (CMA). (2020). Corporate Governance Code for Public Listed Companies. Muscat: Sultanate of Oman. [Google Scholar] [Crossref]

21. Capital Market Authority (CMA). (2016). The Code of Corporate Governance for Public Listed Companies. Muscat, Oman. Retrieved from https://cma.gov.om [Google Scholar] [Crossref]

22. Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1), 20–47. [Google Scholar] [Crossref]

23. Gani, A. A. M. O., Al Rahbi, A. H. S. S., & Ahmed, E. R. (2021). Empirical analysis on corporate transparency, competitive advantage, and performance: An insight of Muscat Securities Market. Journal of Governance and Integrity, 4(2), 96–102. [Google Scholar] [Crossref]

24. Klapper, L. F., & Love, I. (2004). Corporate governance, investor protection, and performance in emerging markets. Journal of Corporate Finance, 10(5), 703–728. [Google Scholar] [Crossref]

25. OECD (2015). G20/OECD Principles of Corporate Governance. OECD Publishing [Google Scholar] [Crossref]

• Financial Technology (Fintech): Current Research at The Cutting Edge
• Reforming Corporate Governance in Malaysia to Address Fraudulent Financial Reporting Cases
• Stock Market Efficiency and Economic Diversification in Nigeria and South Africa
• Financial Stability and Financial Performance of Small and Medium Tiered Deposit Taking Savings and Credit Cooperatives in Kenya.
• Regulator Sandboxes for DeFi: A Comparative Analysis of Policy Effectiveness in the EU, US, and Asia Pacific