Studying the impact of government as governance mechanism on firm performance on the Kuwait stock exchange (KSE)‎

Abstract EN

The relationship between corporate governance mechanisms and firm performance has been thoroughly examined in the literature.

However, less attention has been given to the role of government in this relationship, particularly in Kuwait.

Therefore, this study examined the impact of the government’s role in affecting firm performance on the Kuwait Stock Exchange (KSE).

Some studies have argued that the government serves as a monitoring device that leads to strong firm performance whereas others argued that the opposite is true.

This study used a sample of 80 non-financial listed firms from 2015 to year 2018, using Tobin's Q as a market performance measure and return on assets (ROA) as an accounting performance measure.

The results indicated that government ownership does not impact firm performance whereas the government’s appointment of directors negatively affects firm performance.

According to these results, this study makes several recommendations.

First, government firms must maintain a balance between the benefits of society and the benefits of shareholders.

They must also consider the interests of small shareholders and carefully select qualified directors to be members or directors.

Finally, the government must give more attention to the issue of corporate governance and its role, goals, and benefits not only on the KSE, but also in the country in general