Corporate governance, tourism growth and firm performance: Evidence from publicly listed tourism firms in five Middle Eastern countries

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Abstract

This study explores the under-researched relationship between corporate governance and firm performance in tourism companies. We employ instrumental variable modelling using 2SLS for publicly listed firms in five countries in the Middle East. Board independence is found to be positively related to firm performance and stock performance, suggesting that having independent directors among board members will improve overall firm performance. Board size shows opposing results: large boards enhance firm profitability; however, small boards exhibit more efficient stock performance. Finally, we support the tourism-led-growth hypothesis in our selected sample. These findings have empirical implications for policy makers, governments and academics.
LanguageEnglish
Pages342-351
Number of pages10
JournalTourism Management
Volume42
Early online date8 Jan 2014
DOIs
Publication statusPublished - Jun 2014
Externally publishedYes

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corporate governance
Profitability
tourism
Lead
Tourism
firm
performance
evidence
Industry
profitability
Middle East
director
Firm performance
Corporate governance
Stock performance
modeling

Cite this

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title = "Corporate governance, tourism growth and firm performance: Evidence from publicly listed tourism firms in five Middle Eastern countries",
abstract = "This study explores the under-researched relationship between corporate governance and firm performance in tourism companies. We employ instrumental variable modelling using 2SLS for publicly listed firms in five countries in the Middle East. Board independence is found to be positively related to firm performance and stock performance, suggesting that having independent directors among board members will improve overall firm performance. Board size shows opposing results: large boards enhance firm profitability; however, small boards exhibit more efficient stock performance. Finally, we support the tourism-led-growth hypothesis in our selected sample. These findings have empirical implications for policy makers, governments and academics.",
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