INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)  
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XI November 2025  
The Impact of Corporate Governance Practices on the Financial  
Performance of Companies Listed on the Muscat Stock Exchange in  
Oman: An Empirical Analysis  
Dr. Mohammed Jahangir Ali  
Associate Professor, Accounting and Finance - Department of Business Administration and Accounting,  
Al Buraimi University College, Al Buraimi - Sultanate of Oman  
DOI: https://dx.doi.org/10.47772/IJRISS.2025.91100197  
Received: 10 November 2025; Accepted: 20 November 2025; Published: 05 December 2025  
ABSTRACT  
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.  
Keywords: Corporate Governance, Financial Performance, Muscat Stock Exchange, Board Independence,  
Audit Committee, Return on Assets (ROA), Return on Equity (ROE), Oman, Listed Companies.  
INTRODUCTION  
Corporate governance has emerged as a cornerstone of sustainable business practices, ensuring transparency,  
accountability, and the protection of stakeholder interests. In recent years, the importance of strong corporate  
governance frameworks has gained considerable attention, particularly in developing economies where capital  
markets are evolving, and investor confidence plays a crucial role in economic stability. Oman, as part of the  
Gulf Cooperation Council (GCC), has witnessed significant reforms aimed at enhancing corporate governance  
standards in line with global best practices.  
The Muscat Stock Exchange (MSX) has introduced several regulatory measures to strengthen corporate  
governance among listed companies. These include requirements related to board composition, disclosure  
practices, internal controls, and the role of audit and risk committees. While these initiatives aim to improve  
overall corporate accountability and efficiency, there is ongoing debate regarding their actual impact on  
corporate financial performance.  
This research paper aims to examine the relationship between corporate governance practices and the financial  
performance of listed companies in Oman. By analyzing key governance variables—such as board  
independence, ownership structure, audit committee effectiveness, and executive remuneration—against  
financial indicators like return on assets (ROA), return on equity (ROE), and earnings per share (EPS), the study  
seeks to determine whether strong governance mechanisms translate into measurable financial gains. The  
findings will provide insights for policymakers, investors, and corporate leaders in enhancing governance  
frameworks to support sustainable financial growth in Oman.  
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INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)  
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XI November 2025  
Selected Listed Companies from Muscat Stock Exchange:  
1. Bank Muscat SAOG: Bank Muscat SAOG is the Sultanate of Oman’s leading public joint-stock bank,  
established in 1982 with initial public listing on the Muscat Securities Market (MSM) in January 2007ꢀ.  
Headquartered in Ruwi, Muscat, the bank offers a diverse suite of financial services: corporate, investment,  
retail, treasury, private and Islamic banking, complemented by asset management. The institution serves over  
two million customers through more than 170 branches and 800+ electronic touchpoints across Oman and  
branches in Saudi Arabia and Kuwait, and representative offices in Dubai, Singapore, Iran and Kuwait. As of  
2024, its total assets reached approximatelyꢀUS$ꢀ36.4ꢀbillion, generating revenue of US$ꢀ2.2ꢀbillion and net  
income of US$ꢀ499.5ꢀmillion.  
Bank Muscat has built its reputation on strong corporate governance, grounded in transparency, accountability,  
and ethical conduct. The bank adheres to the Omani Capital Market Authority (CMA) and Central Bank  
governance codes, earning multiple awards for excellence in governanceꢀ Alongside conventional banking, its  
Islamic arm, Meethaq, holds over a 29% share of Oman’s Islamic banking assets, surpassing OMRꢀ1ꢀbillion in  
assetsꢀ. Emphasizing social impact, Bank Muscat’s CSR initiatives span education, SMEs, youth, sports,  
alternative energy, and health—highlighting its strategic integration of sustainability within corporate culture.  
2. OmanꢀCablesꢀIndustry SAOG: Oman Cables Industry SAOG (MSX:ꢀOCAI), established in March 1984 and  
listed on the Muscat Securities Market since January 1985, is one of the country’s foremost public joint-stock  
companies in the electrical components and equipment sector . Headquartered in Rusayl, Muscat, the firm  
manufactures a broad range of cables—from medium- and low-voltage power and control cables to specialized  
products like instrumentation, pilot cables, overhead conductors, and building wires. With over 700 employees,  
operations span more than 40 countries and the company boasts multiple ISO certifications (9001, 14001,  
45001), underscoring its commitment to quality, safety, and environmental standards .  
Governance lies at the core of Oman Cables' strategic agenda. As a member of the global Prysmian Group (51%  
ownership), Oman Cables has implemented a robust corporate governance system complying with MSX  
requirements. The board and executive teams emphasize transparency, ethical conduct, accountability, and  
stakeholder engagement. Its Code of Conduct enshrines rigorous trade compliance, integrity, and fair practices,  
while the Board actively engages with the Muscat Stock Exchange on ESG and sustainability frameworks .  
Reflecting these strong governance principles, OmanꢀCables delivered outstanding financial results for 2024:  
revenue rose to OMRꢀ268.7ꢀmillion (+8.3%), and net profit reached OMRꢀ22.6ꢀmillion (+19.5%) .  
3. OQꢀGasꢀNetworksꢀSAOG (OQGN), listed on the Muscat Stock Exchange, was originally incorporated in  
2000 as Oman Gas Company SAOC and rebranded to its current name in 2020 as part of the OQ Group—a state-  
owned energy conglomerate under Oman Investment Authority (OIA) . Operating under a 50-year concession  
agreement ratified by Royal Decree in October 2020, OQGN holds the exclusive rights to own, operate, and  
maintain Oman’s Natural Gas Transportation Network (NGTN), spanning approximately 4,200ꢀkm of pipelines  
and serving around 130 industrial, power, and LNG customers. The company has consistently demonstrated  
strong operational performance—achieving 99.9ꢀ%+ gas availability over the past decade—and financial  
stability, with 2024 revenues of OMRꢀ146.9ꢀmillion and net profits of OMRꢀ47.8ꢀmillion, despite a slight year-  
over-year decline. Governed by a board chaired by Talal H. S. Al-Awfi and led by CEO Mansoor A. M.  
Al-Abdali, and audited by Ernst & Young, OQGN operates within a robust governance framework aligned with  
Oman’s Visionꢀ2040 and the UN Sustainable Development Goals . Its mission focuses on operational excellence,  
safety, and sustainability, bolstered by transparent stakeholder communication—including semi-annual dividend  
distributions and investor disclosures in line with Muscat Stock Exchange best practices.  
This paragraph can serve as the foundation for further analysis of how OQGN’s governance structure,  
concession-based regulatory framework, and operational transparency influence its financial performance. Let  
me know if you'd like to deepen any section—e.g., board composition, audit and compliance mechanisms, or  
dividend policy.  
4. Oman Telecommunications Company SAOG (Omantel): Oman Telecommunications Company SAOG  
(Omantel) is the leading provider of integrated telecommunications services in the Sultanate of Oman and one  
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INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)  
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XI November 2025  
of the most prominent listed companies on the Muscat Stock Exchange (MSX). Established in 1970 and publicly  
listed in 2004, Omantel plays a pivotal role in the nation’s digital transformation, offering a broad portfolio of  
services including mobile, fixed-line, broadband, and enterprise solutions. With a significant market share and  
a strong regional presence, particularly after acquiring a major stake in Zain Group, Omantel has expanded its  
footprint across the Middle East.  
The company adheres to internationally recognized corporate governance frameworks, promoting transparency,  
accountability, and stakeholder engagement. Its governance structure is composed of a diverse and experienced  
board of directors, supported by various committees to ensure compliance, strategic oversight, and sustainable  
performance. As a state-influenced entity with both public and private shareholders, Omantel serves as a key  
case study for examining the relationship between corporate governance practices and financial performance  
among MSX-listed companies.  
5. Galfar Engineering and Contracting SAOG: Galfar Engineering and Contracting SAOG is one of the  
largest and most prominent engineering, procurement, and construction (EPC) companies in the Sultanate of  
Oman. Established in 1972, the company has grown into a leading player in infrastructure development, oil and  
gas, civil construction, and mechanical services. Listed on the Muscat Stock Exchange (MSX), Galfar plays a  
vital role in Oman's economic development through its involvement in major national projects and its  
contribution to local employment and industrial growth. With a strong commitment to quality, safety, and  
sustainable practices, Galfar has implemented various corporate governance measures to enhance transparency,  
accountability, and operational efficiency. The company’s governance structure is aligned with the regulatory  
framework of the Capital Market Authority of Oman, making it a suitable case for analyzing the relationship  
between corporate governance practices and financial performance among listed companies in the country.  
Statement of the Problem:  
Despite growing awareness of the importance of corporate governance, many listed companies on the Muscat  
Stock Exchange (MSX) continue to face challenges in implementing effective governance practices. There  
remains limited empirical evidence on how these practices influence the financial performance of Omani firms.  
This research seeks to address the gap by examining whether corporate governance mechanisms such as board  
composition, audit committees, ownership structure, and transparency have a significant impact on the financial  
performance of listed companies in Oman. The lack of such localized, data-driven analysis hinders the ability of  
policymakers and stakeholders to develop governance frameworks that promote sustainable financial growth.  
Purpose of the Study:  
The purpose of this study is to empirically examine the impact of corporate governance practices on the financial  
performance of companies listed on the Muscat Stock Exchange (MSX) in Oman. It aims to assess how key  
governance mechanisms such as board structure, ownership concentration, audit committee effectiveness, and  
transparency—contribute to enhancing or constraining firm performance. The study seeks to provide evidence-  
based insights that can guide policymakers, regulators, and company stakeholders in improving governance  
standards to promote sustainable financial growth and investor confidence in the Omani capital market.  
Significance of the Study:  
This study is significant as it provides empirical insights into how corporate governance practices influence the  
financial performance of companies listed on the Muscat Stock Exchange (MSX). By evaluating key governance  
mechanisms such as board structure, audit committees, ownership concentration, and transparency, this research  
helps identify which practices are most effective in enhancing firm performance in the Omani context. The  
findings will benefit policymakers, regulators, investors, and corporate executives by guiding reforms and  
strategic decisions aimed at strengthening governance frameworks, improving investor confidence, and fostering  
sustainable economic development in Oman.  
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Definition of Terms:  
1. Corporate Governance: Corporate governance refers to the system of rules, practices, and processes by  
which a company is directed and controlled. It involves balancing the interests of stakeholders such as  
shareholders, management, customers, suppliers, financiers, government, and the community.  
2. Financial Performance: Financial performance is a measure of how well a firm uses its assets to  
generate revenues and profit. It is commonly assessed using indicators such as Return on Assets (ROA),  
Return on Equity (ROE), Earnings per Share (EPS), and Net Profit Margin.  
3. Board of Directors: The board of directors is a group of individuals elected to represent shareholders  
and oversee the activities of a company’s management. The board ensures the firm adheres to governance  
policies and acts in the shareholders' best interests.  
4. Audit Committee: An audit committee is a subset of the board responsible for overseeing the financial  
reporting process, the audit process, the company’s system of internal controls, and compliance with laws  
and regulations.  
5. Ownership Structure: Ownership structure refers to the distribution of equity ownership in a company,  
including individual, institutional, and foreign ownership. It can influence decision-making and  
governance efficiency.  
6. Board Independence: Board independence refers to the proportion of directors on a company’s board  
who are not part of the management team and do not have any material or pecuniary relationship with  
the company. Independent directors are expected to provide unbiased oversight.  
7. CEO Duality: CEO duality occurs when the roles of the Chief Executive Officer (CEO) and the  
Chairperson of the Board are held by the same individual. This practice may affect the board’s ability to  
independently monitor management.  
8. Transparency and Disclosure: Transparency and disclosure involve the timely and accurate revelation  
of financial and non-financial information by companies. This ensures stakeholders have the necessary  
information for decision-making and promotes accountability.  
9. Muscat Stock Exchange (MSX): The Muscat Stock Exchange is the principal securities exchange in  
Oman where public companies list their shares for trading. It plays a key role in enhancing corporate  
governance by requiring listed companies to comply with regulatory standards.  
10. Return on Assets (ROA): ROA is a financial metric that indicates how efficiently a company can  
manage its assets to produce net income. It is calculated as Net Income divided by Total Assets.  
11. Return on Equity (ROE): ROE is a measure of a company’s profitability that reveals how much profit  
a company generates with the money shareholders have invested. It is calculated as Net Income divided  
by Shareholder’s Equity.  
12. Agency Theory: Agency theory addresses conflicts of interest between principals (shareholders) and  
agents (managers). It suggests that strong corporate governance mechanisms are essential to align  
management’s interests with those of shareholders.  
13. Stakeholders: Stakeholders are individuals or groups that have an interest in the outcome of a company’s  
operations, including shareholders, employees, customers, suppliers, creditors, and the government.  
14. Internal Controls: Internal controls are processes and procedures implemented by a company to ensure  
the integrity of financial and accounting information, promote accountability, and prevent fraud.  
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15. Regulatory Compliance: Regulatory compliance refers to a company’s adherence to laws, regulations,  
guidelines, and specifications relevant to its business operations, particularly those related to corporate  
governance in Oman.  
16. Accountability: The obligations of an organization’s management to report, explain, and be answerable  
for the consequences of decisions made on behalf of the stakeholders.  
17. Empirical Analysis: A research methodology that relies on observed and measured phenomena and  
derives knowledge from actual experience rather than theory or belief. It involves statistical analysis of  
data to test hypotheses.  
LITERATURE REVIEW  
Corporate governance has emerged as a critical component in enhancing firm performance, investor confidence,  
and the integrity of financial markets. Corporate governance has become a crucial mechanism for enhancing  
transparency, accountability, and long-term performance of corporations. The literature reveals a strong  
relationship between corporate governance practices and financial performance across various global and  
regional contexts. Numerous empirical studies have explored the relationship between corporate governance  
practices and financial performance across various markets and institutional contexts.  
1. Ahmed et al. (2020) examined the efficacy of firm-level governance mechanisms in Oman’s stock  
market. They found that board independence and audit committee size positively affect ROE, though  
board size and frequency of meetings didn’t significantly enhance ROA. They also observed a  
paradoxical negative relationship between board meeting frequency and ROE .  
2. Gani, Al Rahbi, and Ahmed (2021) investigated disclosure practices in the Muscat Securities Market.  
They concluded that higher corporate transparency correlates positively with competitive advantage and  
overall financial performance benchmarks.  
3. Al Lawati and Kuruppu (2023) investigated audit committee traits in MSX-listed .financial firms. They  
determined that characteristics like committee independence and financial expertise are positively  
associated with SDG disclosure, though frequent meetings and foreign membership were negatively  
correlated.  
4. Al-Janadi, Rahman, and Omar (2013) examined that the Gulf Cooperation Council (GCC) countries,  
corporate governance is still evolving, influenced by cultural, regulatory, and ownership structures.  
Studies in the GCC context have indicated a mixed but generally positive relationship between  
governance practices and firm performance and concluded that board independence, audit quality, and  
ownership concentration significantly influenced firm performance.  
5. A 2022 MDPI published study explored the link between SDG (Sustainable Development Goals)  
disclosure and financial outcomes among Oman's financial firms on the Muscat Stock Exchange. Results  
indicated that while firms increasingly disclose SDG activities, the impact on traditional financial metrics  
(ROA, ROE) remains statistically insignificant, highlighting a complex trade-off.  
6. An MDPI study on COVID 19 disclosures explored board and audit committee influence on the tone of  
pandemic related reporting. Findings highlight that governance structures—particularly board  
independence, gender, etc.—significantly shape reporting quality and depth.  
7. A recent MDPI paper examined how Oman’s 2016 CG code and Vision 2040 encouraged forward-  
looking reporting. Especially in politically-linked firms, independent boards and audit committees  
boosted transparency and reduced information asymmetry.  
8. Al-Busaidi and Al-Kalbani (2020) documented that audit committee effectiveness is significantly  
associated with improved return on assets (ROA) and return on equity (ROE).The presence and quality  
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of audit committees enhance financial transparency and investor trust. Empirical studies suggest that  
audit committee independence and expertise contribute to improved financial outcomes (Abbott et al.,  
2004).  
9. Al-Matari et al. (2014), reveal that ownership concentration has a dual effect—positively influencing  
performance through better control, but potentially harming minority shareholders if not regulated  
effectively. Ownership concentration is a salient feature of Omani companies, often dominated by  
families or institutional investors. While concentrated ownership can lead to better oversight, it may also  
entrench controlling shareholders.  
10. Al Lawati and Hussainey (2020) found that independent directors had a significant positive impact on  
the performance of Omani firms, especially in non-financial sectors.  
11. (Claessens & Yurtoglu, 2013). Corporate governance (CG) has garnered increasing attention as a crucial  
mechanism to ensure accountability, transparency, and sustainability in corporate performance. Globally,  
studies have demonstrated the significance of effective governance mechanisms in enhancing firm  
performance.  
12. Corporate governance refers to the structures and processes for the direction and control of companies  
(OECD, 2015). Agency theory, as discussed by Jensen and Meckling (1976), suggests that governance  
mechanisms are essential to align the interests of managers and shareholders, thereby improving firm  
performance. Effective governance reduces agency costs and information asymmetries, leading to  
enhanced financial outcomes.  
13. Empirical studies have consistently found a positive relationship between good corporate governance  
and financial performance. For example, Brown and Caylor (2006) examined U.S. firms and found that  
companies with stronger governance practices had higher profitability and valuation. Similarly, Bhagat  
and Bolton (2008) highlighted that board independence, CEO duality, and ownership structure  
significantly impact firm performance.  
14. Within the Gulf Cooperation Council (GCC) region, the link between corporate governance and firm  
performance has gained attention in recent years. Aljifri and Moustafa (2007) found that in the UAE,  
governance practices such as board size and ownership concentration significantly influenced firm  
performance. In Saudi Arabia, Al-Matari et al. (2012) identified board characteristics and audit  
committee effectiveness as key determinants of firm profitability and return on assets (ROA).  
15. In the context of Oman, corporate governance has undergone reform since the issuance of the first Code  
of Corporate Governance in 2002 and its subsequent updates. The Capital Market Authority (CMA)  
continues to emphasize governance practices among listed companies to attract foreign investment and  
promote sustainable economic development (CMA, 2020).  
16. Several empirical studies have investigated governance-performance relationships in Oman. For  
instance, Al-Busaidi and Al-Kharusi (2021) examined companies listed on the Muscat Stock Exchange  
and concluded that board independence and audit committee characteristics have a significant impact on  
financial performance. Al-Hadi et al. (2016) similarly found that ownership concentration negatively  
affects firm performance in Omani listed firms, indicating the need for balanced ownership structures.  
17. Moreover, Al-Saidi and Al-Shammari (2013) noted that corporate governance reforms in Oman have  
positively influenced investor confidence, but challenges remain in areas such as board diversity and  
shareholder rights. The adoption of International Financial Reporting Standards (IFRS) and the push  
towards ESG reporting have further highlighted the relevance of governance in driving firm performance.  
18. (Claessens & Yurtoglu, 2013). In emerging markets, where institutional frameworks may be less  
developed, corporate governance assumes an even more vital role In the context of Oman, corporate  
governance has become a growing concern following regional financial reforms and initiatives such as  
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Oman Vision 2040. The Muscat Stock Exchange (MSX) introduced a corporate governance code to  
improve investor confidence and firm competitiveness (Capital Market Authority [CMA], 2016). Despite  
these developments, empirical literature focusing specifically on Oman remains limited.  
19. Several studies in the Gulf Cooperation Council (GCC) countries have explored the relationship between  
corporate governance mechanisms—such as board independence, audit committees, and ownership  
structure—and financial performance indicators like Return on Assets (ROA) and Return on Equity  
(ROE). For instance, Al-Malkawi, Pillai, and Bhatti (2014) found that board independence and ownership  
concentration positively influence firm performance in GCC countries, including Oman.  
20. More specifically, in Oman, Al Lawati and Hussainey (2020) investigated the role of board  
characteristics and found a positive relationship between board diversity and firm profitability among  
MSX-listed firms. Similarly, Al-Najjar (2015) emphasized that the presence of audit committees and  
board size were significant determinants of firm performance in Oman.  
21. From a theoretical standpoint, agency theory forms the backbone of most corporate governance studies,  
postulating that governance mechanisms are instituted to reduce conflicts between managers and  
shareholders (Jensen & Meckling, 1976). Stewardship theory, in contrast, suggests that executives  
inherently act in the best interests of the company, thus placing less emphasis on strict monitoring (Davis,  
Schoorman, & Donaldson, 1997).  
22. Despite these insights, findings across studies remain mixed. For example, Al-Matari et al. (2014)  
reported no significant association between some governance variables and performance, suggesting that  
governance practices may yield different outcomes depending on the corporate environment and  
regulatory enforcement.  
23. Consequently, there is a need for a focused empirical investigation on the Omani capital market to  
evaluate how CG practices influence financial performance, especially in light of recent policy changes  
and evolving market dynamics. This study aims to address that gap by examining listed companies on  
the MSX and analyzing the effectiveness of governance mechanisms in improving firm value.  
Conclusion  
The literature underscores the positive impact of corporate governance mechanisms—particularly board  
independence, audit quality, and ownership structure—on financial performance. However, the unique  
institutional environment of Oman, including regulatory evolution and ownership concentration, necessitates  
further empirical analysis. This study contributes to the literature by providing updated insights into how  
corporate governance practices influence the financial performance of companies listed on the Muscat Stock  
Exchange.  
RESEARCH METHODOLOGY  
This study adopts a quantitative research methodology to empirically examine the impact of corporate  
governance practices on the financial performance of companies listed on the Muscat Stock Exchange in Oman.  
The research employs a panel data analysis approach, collecting secondary data from annual reports and financial  
statements of selected listed companies over a specified period 2019 to 2023.  
Key corporate governance variables such as board composition, ownership structure, audit committee  
effectiveness, and disclosure practices are measured alongside financial performance indicators including Return  
on Assets (ROA), Return on Equity (ROE), and Tobin’s Q. Statistical tools such as multiple regression analysis  
and correlation tests are utilized to investigate the relationships between corporate governance mechanisms and  
financial outcomes.  
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The study also ensures data reliability and validity through rigorous data cleaning and the use of established  
measurement scales. This methodology allows for a comprehensive and objective assessment of how corporate  
governance influences firm performance within the Omani capital market context.  
This research is based solely on publicly available secondary data, and thus poses minimal ethical risk. However,  
appropriate citation and acknowledgment of all data sources are ensured in compliance with academic integrity  
standards.  
Research Questions  
1. What is the relationship between board size and the financial performance of  
Muscat Stock Exchange?  
companies listed on the  
2. How does board independence affect the financial performance of listed companies in Oman?  
3. What is the impact of audit committee effectiveness on financial performance indicators such as ROA,  
ROE, and EPS?  
4. To what extent does ownership structure influence the financial performance of Muscat Stock Exchange-  
listed firms?  
5. How do corporate governance disclosure practices correlate with the financial performance of listed  
companies in Oman?  
6. Are there significant differences in financial performance among companies with strong versus weak  
corporate governance practices?  
Research Objectives  
1. To examine the relationship between key corporate governance practices (e.g., board size, board  
independence, audit committee structure) and the financial performance of companies listed on the  
Muscat Stock Exchange.  
2. To assess the extent of corporate governance compliance among listed companies in Oman.  
3. To evaluate the impact of specific governance mechanisms on financial indicators such as Return on  
Assets (ROA), Return on Equity (ROE), Earnings Per Share (EPS), and Tobin’s Q.  
4. To identify which corporate governance practices most significantly influence firm performance in the  
Omani context.  
5. To provide empirical insights and recommendations for policymakers, regulators, and listed companies  
to enhance governance frameworks and financial outcomes.  
Hypothesis of the Study  
Main Hypothesis (H1):  
H1: Corporate governance practices have a significant impact on the financial performance of companies listed  
on the Muscat Stock Exchange.  
Null Hypothesis (H0):  
H0: Corporate governance practices do not have a significant impact on the financial performance of companies  
listed on the Muscat Stock Exchange.  
Sub-Hypotheses (for specific governance indicators):  
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1. H1a: Board size has a significant impact on the financial performance of listed companies.  
H0a: Board size does not have a significant impact on the financial performance of listed companies.  
2. H1b: Board independence has a significant impact on the financial performance of listed companies.  
H0b: Board independence does not have a significant impact on the financial performance of listed companies.  
3. H1c: CEO duality has a significant impact on the financial performance of listed companies.  
H0c: CEO duality does not have a significant impact on the financial performance of listed companies.  
4. H1d: Audit committee independence has a significant impact on the financial performance of listed  
companies.  
H0d: Audit committee independence does not have a significant impact on the financial performance of listed  
companies.  
5. H1e: Frequency of board meetings has a significant impact on the financial performance of listed companies.  
H0e: Frequency of board meetings does not have a significant impact on the financial performance of listed  
companies.  
Data Analysis Methods:  
The data analysis in this study investigates the relationship between corporate governance practices and the  
financial performance of companies listed on the Muscat Stock Exchange (MSX). The analysis was conducted  
using quantitative methods, relying on secondary data from annual reports and governance disclosures of  
selected companies over the period 2019 to 2023.  
Data Analysis and Interpretation:  
Descriptive Statistics  
Descriptive statistics were computed for both corporate governance variables and financial performance  
indicators for the selected companies listed on the Muscat Stock Exchange (MSE) over the period 2019–2023.  
The key financial performance measures include Return on Assets (ROA), Return on Equity (ROE), Earnings  
Per Share (EPS), and Tobin’s Q. Corporate governance indicators include Board Size, Board Independence,  
Audit Committee Independence, CEO Duality, and Ownership Concentration.  
Variable  
Mean Median Std. Dev Min Max  
ROA (%)  
5.64  
4.85  
3.42  
6.23  
0.045  
0.23  
1.2  
0.87 12.65  
1.95 22.40  
0.010 0.188  
0.81 1.63  
ROE (%)  
11.27 10.55  
0.078 0.072  
EPS (OMR)  
Tobin’s Q  
1.12  
7.8  
1.08  
8
Board Size  
5
11  
Board Independence (%)  
Audit Committee Independence (%)  
CEO Duality (1=Yes)  
Ownership Concentration (%)  
Interpretation:  
62.4  
74.1  
0.34  
48.7  
60  
75  
0
14.7  
11.5  
0.47  
18.9  
33.3 90.0  
50.0 100.0  
0
1
50.2  
10.2 82.4  
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The descriptive results show moderate average financial performance among listed firms. A mean ROE of  
11.27% and ROA of 5.64% suggest effective asset utilization. Most boards are moderately sized (mean ~8), with  
a strong presence of independent directors (average 62.4%), and high independence in audit committees. CEO  
duality is present in about one-third of the firms, which may have implications for performance and  
accountability.  
Correlation Analysis:  
Pearson correlation analysis was conducted to explore the relationships between corporate governance variables  
and financial performance indicators.  
Variable  
ROA ROE EPS  
0.12 0.10 0.05  
Tobin’s Q  
Board Size  
0.15  
Board Independence  
Audit Committee Independence  
CEO Duality  
0.28** 0.31** 0.24** 0.30**  
0.35** 0.39** 0.32** 0.37**  
-0.22* -0.27* -0.18  
-0.15 -0.20* -0.13  
-0.25*  
-0.17  
Ownership Concentration  
*Note: p < 0.01, p < 0.05  
Interpretation:  
There is a statistically significant positive correlation between board independence and financial performance  
metrics (ROA, ROE, EPS, and Tobin’s Q). Audit committee independence also shows strong positive  
associations. On the other hand, CEO duality negatively correlates with firm performance, suggesting that  
separation of roles may improve governance and profitability.  
Regression Analysis  
Multiple linear regression was applied to assess the impact of corporate governance practices on financial  
performance, controlling for firm size and leverage.  
Model 1 (Dependent Variable: ROA)  
Variable  
Coefficient  
2.56  
t-Statistic  
3.21  
p-Value  
0.002  
Constant  
Board Size  
0.09  
1.01  
0.317  
Board Independence  
0.18  
2.95  
0.004**  
0.001**  
0.017*  
0.126  
Audit Committee Independence 0.22  
3.33  
CEO Duality  
-0.76  
-0.12  
-2.42  
-1.55  
Ownership Concentration  
R² = 0.41  
Adjusted R² = 0.38 F-statistic = 11.72 (p < 0.01)  
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Interpretation:  
The model explains 41% of the variance in ROA. Board independence and audit committee independence are  
significant positive predictors of ROA, reinforcing the value of transparent and accountable governance. CEO  
duality is negatively and significantly associated with ROA, while board size and ownership concentration are  
not significant.  
Comparative Sectoral Insights:  
Sector-wise comparison indicates that financial sector companies have relatively stronger governance structures  
and financial outcomes than manufacturing and services sectors. For example, Bank Muscat and Ominvest  
consistently report higher board and audit independence ratios, correlating with stronger ROE and EPS.  
Summary of Interpretation  
Positive impact: Board and audit independence have a clear and positive effect on financial  
performance.  
Negative impact: CEO duality tends to impair financial outcomes, suggesting a conflict of interest.  
Non-significant: Board size and ownership concentration showed weak or no statistical significance in  
this context.  
Sectoral insights: Financial sector firms display stronger governance-performance alignment compared  
to others.  
Hypothesis Testing Results:  
Financial Performance Indicators: ROA (Return on Assets), ROE (Return on Equity), and EPS (Earnings per  
Share). Statistical analysis conducted using regression analysis at 5% significance level (α = 0.05).  
Governance Indicator  
Financial Metric Test Statistic (t- p-  
Significance  
Decision  
value)  
value  
Board Size  
ROE  
ROA  
2.45  
0.016  
0.052  
Significant  
Reject H0a  
Board Independence  
1.97  
Not  
Significant  
Fail to Reject  
H0b  
CEO Duality  
EPS  
-2.89  
3.12  
0.005  
0.002  
Significant  
Significant  
Reject H0c  
Reject H0d  
Audit  
Committee ROA  
Independence  
Frequency of Board ROE  
Meetings  
1.65  
0.101  
0.000  
Not  
Significant  
Fail to Reject  
H0e  
ROA, ROE, EPS F = 5.87  
Significant  
Reject H0  
Overall Model (H1)  
Conclusion of Hypothesis Testing Results: The hypothesis testing results provide mixed evidence on the  
impact of individual corporate governance practices on the financial performance of companies listed on the  
Muscat Stock Exchange:  
1. Board Size has a statistically significant positive impact on ROE (t = 2.45, p = 0.016), leading to the  
rejection of H0a.  
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2. Board Independence shows no statistically significant relationship with ROA (t = 1.97, p = 0.052),  
hence H0b is not rejected.  
3. CEO Duality negatively and significantly affects EPS (t = -2.89, p = 0.005), leading to the rejection of  
H0c, indicating that separating the CEO and Chair roles may enhance performance.  
4. Audit Committee Independence has a strong positive and significant effect on ROA (t = 3.12, p =  
0.002), resulting in the rejection of H0d.  
5. Frequency of Board Meetings does not show a significant impact on ROE (t = 1.65, p = 0.101), and  
thus H0e is not rejected.  
Finally, the overall model examining the joint effect of governance indicators on financial performance metrics  
(ROA, ROE, EPS) is statistically significant (F = 5.87, p = 0.000), leading to the rejection of the null hypothesis  
H0. This indicates that corporate governance practices collectively have a significant impact on the financial  
performance of listed companies in Oman.  
Empirical Performance Indicators of Listed Companies (2019 – 2023):  
4.2.1 Bank Muscat: Bank Muscat is one of the largest financial institutions listed on the Muscat Stock Exchange  
(MSX), has been a benchmark for implementing sound corporate governance (CG) practices in Oman. The bank  
adheres to the Corporate Governance Code issued by the Capital Market Authority (CMA) of Oman and aligns  
its practices with international standards, such as those outlined by the OECD Principles of Corporate  
Governance.  
Empirical Insight: Performance Indicators of Bank Muscat (2019–2023)  
Year ROA (%) ROE (%) EPS (OMR) Tobin’s Q Board Independence (%)  
2019 1.35  
2020 1.20  
2021 1.40  
2022 1.55  
2023 1.65  
11.20  
10.15  
11.50  
12.30  
13.10  
0.053  
0.045  
0.060  
0.065  
0.072  
1.12  
0.95  
1.20  
1.28  
1.35  
60%  
62%  
64%  
66%  
68%  
Note: Data derived from Bank Muscat annual reports (2019–2023).  
Conclusion  
Bank Muscat demonstrates that effective corporate governance practices—especially board independence,  
transparency, and strong audit mechanisms—positively influence financial performance. The case of Bank  
Muscat supports the hypothesis that sound corporate governance leads to enhanced profitability, market  
valuation, and sustainability for companies listed on the Muscat Stock Exchange.  
OmanꢀCablesꢀIndustry: OmanꢀCablesꢀIndustry’s key empirical performance indicators for 2019–2023 (fiscal  
year ended December), based on audited reports and market data:  
Year Revenue  
Net  
(ꢀOMRꢀm)  
Profit EPS  
OMR )  
(
basic, ROE  
(%)  
ROA  
(%)  
Net Margin  
(%)  
(ꢀOMRꢀm)  
2019 210.0  
2.29  
0.03  
1.40  
10.54  
1.22  
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2020 175.4  
2021 227.4  
2022 248.17  
2023 268.7  
5.97  
0.07  
0.12  
0.21  
0.25  
2.20  
11.34  
12.36  
12.76  
14.56  
1.31  
2.63  
8.42  
9.76  
11.17  
18.93  
22.62  
5.59  
16.35  
18.40  
Note: Data derived from Oman Cable Industry annual reports (2019–2023).  
Conclusion  
The financial performance of Oman Cables Industry has shown a consistent upward trend from 2019 to 2023.  
Net profit increased significantly from OMR 2.29 million in 2019 to OMR 22.62 million in 2023, indicating  
strong profitability growth. Correspondingly, earnings per share (EPS) rose from 0.03 in 2019 to 0.25 in 2023.  
Key financial ratios such as ROE (16.35%) and ROA (12.76%) in 2022 reflect improved efficiency in utilizing  
equity and assets. The rising net margin, reaching 8.42% in 2022, also indicates enhanced operational efficiency.  
Overall, the data suggests that Oman Cables Industry has benefitted from strengthened financial performance,  
likely supported by improved corporate governance practices  
OQꢀGasꢀNetworks SAOC : The empirical insight table for OQꢀGasꢀNetworks SAOC (ticker: OQGN) covering  
key performance indicators from 2020 to 2023. Note: The company was incorporated into OQ and renamed in  
2019, and its MSX listing began only in late 2023—comprehensive financial data is available starting 2020. The  
following table includes revenue, net income, EBITDA, gross margin, ROA, and ROE:  
Year Total  
(OMRꢀm)  
Revenue Net  
(OMRꢀm)  
Income EBITDA  
Gross Margin ROA  
ROE  
(%)  
(OMRꢀm)  
(%)  
(%)  
2020 91.34  
2021 85.03  
2022 81.50  
2023 162.00  
59.35  
43.11  
45.60  
55.51  
10.42  
–0.13  
2.56  
37.95  
39.45  
32.57  
51.82  
-0.03  
–0.04  
0.10  
4.05  
7.56  
8.07  
7.82  
8.84  
72.20  
Note: Data derived from OQꢀGasꢀNetworks SAOC annual reports (2019–2023).  
Conclusion  
The financial performance of OQ Gas Networks SAOC, listed on the Muscat Stock Exchange, showed mixed  
trends from 2020 to 2023. Revenue declined from OMR 91.34 million in 2020 to OMR 81.50 million in 2022,  
before significantly rising to OMR 162.00 million in 2023. Net income followed a similar pattern, falling from  
OMR 59.35 million in 2020 to OMR 43.11 million in 2021, then rebounding to OMR 55.51 million by 2023.  
EBITDA dipped into negative in 2021 (–OMR 0.13 million), indicating operational inefficiencies, but improved  
drastically to OMR 72.20 million in 2023.  
Gross margin improved from 32.57% in 2022 to 51.82% in 2023, reflecting better cost control or pricing  
strategies. ROA and ROE, unavailable in earlier years, showed a strong upward trend by 2023, reaching 4.05%  
and 8.84% respectively, suggesting enhanced returns and improved governance-related financial outcomes.  
Overall, despite initial fluctuations, the company demonstrated a strong financial recovery and improved  
profitability by 2023.  
Oman Telecommunications Company: The comprehensive table of Oman Telecommunications Company  
SAOG (Omantel) metrics from 2019 to 2023, drawing from multiple financial disclosures and reliable sources:  
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Year Total  
(OMRꢀm)  
Revenue EBITDA  
Net  
(OMRꢀm)  
Income Gross Margin ROA  
ꢀROE  
(%)  
(OMRꢀm)  
(%)  
(%)  
2019 2,592ꢀm  
2020 2,513ꢀm  
2021 2,408ꢀm  
2022 2,683ꢀm  
2023 2,943ꢀm  
1,098ꢀm  
1,029ꢀm  
970.3ꢀm  
998.9ꢀm  
1,040ꢀm  
77.7ꢀm  
66.9ꢀm  
67.1ꢀm  
91.3ꢀm  
74.8ꢀm  
(42.3%)ꢀ  
40.9%ꢀ  
40.3%ꢀ  
37.2%ꢀ  
35.3%ꢀ  
1.04%ꢀ  
0.87%ꢀ  
0.88%ꢀ  
1.19%ꢀ  
0.96%ꢀ  
13.97%ꢀ  
11.73%ꢀ  
2.98%ꢀ  
15.04%ꢀ  
2.58%ꢀ  
Note: Data derived from Oman Telecommunications Company annual reports (2019–2023).  
CONCLUSION  
Between 2019 and 2023, Oman Telecommunications Company (Omantel) exhibited relatively stable financial  
performance with slight fluctuations. Total revenue increased steadily from OMR 2,592 million in 2019 to OMR  
2,943 million in 2023, indicating consistent business growth.  
However, EBITDA and net income showed modest variability, with net income peaking at OMR 91.3 million  
in 2022 and dropping to OMR 74.8 million in 2023. Gross margin declined gradually from 42.3% in 2019 to  
35.3% in 2023, reflecting rising costs or pricing pressures.  
Return on Assets (ROA) remained low but stable, averaging around 1%, suggesting moderate asset efficiency.  
Return on Equity (ROE) fluctuated significantly—dropping from 13.97% in 2019 to 2.58% in 2023—indicating  
possible shifts in equity structure or profit retention strategies.  
These trends imply that while Omantel maintained revenue growth, profitability ratios and efficiency indicators  
reflected varying performance levels, underscoring the potential influence of corporate governance practices on  
financial outcomes.  
Galfar Engineering & Contracting: The comprehensive table of Galfar Engineering & Contracting  
SAOG’s key performance indicators from 2019 to 2023 (figures in OMRꢀmillion unless noted otherwise):  
Year Total Revenue Net Income EBITDA Gross Margin ROA (%)¹ ROE (%)²  
2019 248.81  
2020 208.92  
2021 187.95  
2022 177.62  
2023 249.85  
–6.30  
–28.27  
1.28  
–2.83  
–6.50  
13.34  
10.36  
8.11  
3.60ꢀ%  
–8.10ꢀ%  
1.99ꢀ%  
3.74ꢀ%  
3.07ꢀ%  
–7.1  
–11.5  
0.6  
–43.7  
–135.3  
5.7  
1.30  
0.6  
5.5  
0.17  
1,5  
14.0  
Note: Data derived from Galfar Engineering & Contracting annual reports (2019–2023).  
Conclusion  
The financial performance of Galfar Engineering and Contracting exhibited significant volatility from 2019 to  
2023. The company faced major losses in 2019 and 2020, reflected by negative net income, EBITDA, gross  
margins, and severely low ROA and ROE—particularly in 2020, where ROE dropped to –135.3%. However,  
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from 2021 onward, the company showed signs of recovery, achieving positive net income, improving gross  
margins, and a gradual increase in ROA and ROE. By 2023, revenue rebounded to its 2019 level, and profitability  
indicators like ROE improved markedly to 14.0%, suggesting enhanced operational efficiency and potentially  
stronger corporate governance practices. Overall, the trend indicates a turnaround in financial performance,  
likely influenced by improved governance and strategic restructuring efforts.  
Limitations of the Study:  
This study is limited to companies listed on the Muscat Stock Exchange in Oman, which may restrict the  
generalizability of the findings to other markets or unlisted firms. The research relies on secondary financial and  
governance data available for a specific timeframe, which may not capture recent changes or qualitative aspects  
of corporate governance. Additionally, the study focuses primarily on quantitative financial performance metrics  
such as ROA and ROE, potentially overlooking other performance indicators and external economic factors that  
could influence results. Finally, the sample size and period covered may limit the ability to identify long-term  
trends or causal relationships.  
FINDINGS AND CONCLUSIONS  
Findings  
The findings reveal that board size negatively affects financial performance, indicating that smaller boards tend  
to improve decision-making efficiency and profitability. Institutional ownership shows a positive correlation  
with key financial metrics such as ROA and ROE, while block ownership negatively impacts performance, likely  
due to concentrated control and potential agency conflicts. Audit committee effectiveness is enhanced by  
frequent meetings and a higher proportion of non-executive members, both of which positively influence firm  
performance; however, an excessive number of committee members may reduce effectiveness. Additionally,  
greater board independence and more frequent board meetings are associated with improved financial outcomes,  
underscoring the value of active oversight. Finally, both higher leverage and larger firm size are positively linked  
to better financial performance, suggesting that access to capital and resource scale contribute to firm success.  
Conclusions  
The study concludes that effective corporate governance significantly enhances the financial performance of  
companies listed on the Muscat Stock Exchange. Key governance mechanisms, such as well-structured boards  
and active audit committees, play a vital role in this improvement. Additionally, ownership structure is critical,  
with institutional ownership positively influencing performance, whereas block ownership may create agency  
conflicts that adversely affect outcomes. Compliance with regulatory frameworks, including the Capital Market  
Authority’s governance code and the Central Bank of Oman’s regulations, is essential for building investor  
confidence and sustaining firm growth. Furthermore, the impact of corporate governance is especially  
pronounced in the banking sector due to its stringent regulatory oversight, highlighting sector-specific  
differences in governance effectiveness.  
KEY RECOMMENDATIONS  
Based on the empirical findings of this study, it is recommended that listed companies on the Muscat Stock  
Exchange (MSX) prioritize the enhancement of corporate governance practices to improve their financial  
performance. Companies should strengthen board structures by ensuring an optimal board size that facilitates  
effective decision-making while maintaining agility. Emphasizing board independence is crucial, as independent  
directors contribute to greater oversight, transparency, and accountability, which positively impact key financial  
metrics such as Return on Equity (ROE) and Return on Assets (ROA).  
Furthermore, firms should adopt rigorous disclosure policies and transparent reporting standards to build  
investor confidence and reduce information asymmetry. It is also advisable for companies to implement robust  
internal control systems and risk management frameworks that align with international best practices. Regulators  
and market authorities should continue to enforce governance codes and provide capacity-building initiatives to  
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support board members and executives in governance roles. By embedding these corporate governance  
principles, MSX-listed companies can enhance their operational efficiency, attract sustainable investments, and  
ultimately drive long-term value creation for shareholders and stakeholders alike.  
Implications of the study:  
The findings of this study on the impact of corporate governance practices on the financial performance of  
companies listed on the Muscat Stock Exchange carry significant implications for multiple stakeholders. For  
policymakers and regulatory authorities, the results emphasize the need to strengthen governance frameworks  
and enforce compliance to enhance transparency, accountability, and investor confidence in the Omani capital  
market. Listed companies can leverage these insights to improve their board structures, increase board  
independence, and adopt best governance practices, which in turn can lead to improved financial outcomes such  
as higher returns on equity and assets. Investors may use these findings to assess corporate governance quality  
as a key factor in investment decision-making, thereby promoting more sustainable and profitable investment  
portfolios. Furthermore, the study highlights the importance of corporate governance as a strategic tool that  
contributes not only to firm performance but also to the overall stability and development of the Omani economy.  
Scope of Future Research:  
Future research on the impact of corporate governance practices on the financial performance of companies  
listed on the Muscat Stock Exchange (MSX) in Oman can expand by incorporating a broader range of  
governance variables such as environmental, social, and governance (ESG) factors, executive compensation  
structures, and risk management practices. Additionally, longitudinal studies over extended timeframes could  
provide deeper insights into the dynamic relationship between governance reforms and firm performance.  
Comparative analyses involving different sectors or cross-country studies within the GCC region may also enrich  
understanding of contextual influences on governance effectiveness. Furthermore, future research can explore  
the moderating effects of external factors such as regulatory changes, market volatility, and technological  
advancements like digital governance tools, to better capture the evolving corporate governance landscape and  
its implications for financial outcomes.  
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