The Ownership Structure, The Board of Directors and the Corporate Performance: Complementarity or Substitutability? Evidence from Companies Listed On Abu Dhabi Stock Exchange.
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This study investigates the interrelations between the ownership structure, the board of directors and the performance of the companies using annual data for 33 companies listed on Abu Dhabi Stock Exchange during the period 2007 - 2009. The system of the simultaneous equations shows important interrelations between the managerial ownership and board of directors‟ characteristics. The managerial ownership appears substitutable to the blockholders ownership, institutional ownership and the board size while it is complementary to the board duality. Our results show also that the board duality and the financial policy of the company are substitutable, while the blockholders ownership, the institutional and the board size are complementary governance mechanisms. Our empirical results show also that the relationship between the managerial ownership and the corporate performance is not significant and that the managerial ownership is endogenous and it depends, among others, on the corporate performance. Moreover, the blockholders ownership, the institutional ownership and the board size have all negative impacts on the performance, while the board duality, the age and the firm size guarantee a better performance of the company.