الملخص الإنجليزي
Abstract:
This study aims to investigate the relationship between corporate governance mechanisms
and the insolvency risk of publicly listed companies in the GCC stock exchanges. This
investigation is conducted by utilizing multinomial logistic regression analysis. This study
has considered nine corporate governance mechanisms which include board size, board
meetings, board independence, blockholders ownership, institutional ownership, executive
ownership, audit committee size, audit committee meetings and audit committee
independence. The results show that there is a significant negative association between
board size and the insolvency risk, which determines that in the case that the firm has more
members on the board, there is a higher likelihood that it will have a low insolvency risk.
The results also show that there is a significant positive relationship between board
meetings and insolvency risk, thus indicating that the more and frequent meetings, the more
likely it is that the firm will experience a higher insolvency risk. However, the results show
that the board independence has no significant impact on the firm's insolvency risk.
Regarding the ownership structure characteristics, the results have shown that blockholders
ownership has a positive relationship with insolvency risk, however, the results show that
the institutional ownership and the executive ownership, have no significant impact on the
firms' insolvency risk. Additionally, regarding the audit committee characteristics, the
results show that there is a positive relationship between audit committee size and
insolvency risk. Whereas the frequency of audit committee meetings has a negative impact
on the firms' insolvency risk. However, the results of the final independent variable, the
audit committee independence, have contradicted each other in the first and second models,
where the first model concluded that the audit committee independence has no significant
impact on the insolvency risk, whereas in the second model, results have inferred that there
is a negative relationship between the audit committee independence and the insolvency
risk. Consequently, the outcome of this study provides a useful contribution to
policymakers, investors, and other stakcholders in the firm to follow essential
precautionary measures in order to avoid financial distress and insolvency risk.
Keywords - Corporate Governance, Insolvency Risk, Financial Distress, Altman Z-
Score, GCC Countries
