Financial Markets Under SVAR Approach for Middle East Economies

2013 ◽  
Author(s):  
Pinar Deniz
Keyword(s):  
Middle East ◽  
Financial Markets

Gulf Cooperation Council (GCC) - Economic Prospects and Policy Challenges for the GCC Countries

Policy Papers ◽  
2013 ◽  
Vol 2013 (87) ◽  
Author(s):  
Keyword(s):  
Middle East ◽  
Emerging Markets ◽  
Financial Markets ◽  
Gulf Cooperation Council ◽  
Economic Environment ◽  
Quantitative Easing ◽  
Regional Economic ◽  
Gcc Countries ◽  
Global Growth

The global and regional economic environment remains challenging. Global growth remains tepid, and although some pick-up is expected, risks are tilted to the downside. Recent volatility in financial markets is having a significant impact on some large emerging markets, highlighting the challenges that will be faced in unwinding the Federal Reserve’s quantitative easing policy. Geopolitical uncertainties in the Middle East are also high.

scholarly journals Corporate governance and firm valuation in emerging markets: evidence from UAE listed companies in the Middle East

2013 ◽  
Vol 11 (1) ◽  
pp. 637-656
Author(s):  
Mohamed Adawi ◽  
Kami Rwegasira
Keyword(s):  
Corporate Governance ◽  
Middle East ◽  
Emerging Markets ◽  
Financial Markets ◽  
Listed Companies ◽  
Firm Valuation ◽  
Tobin's Q ◽  
Governance Indicators ◽  
Company Valuation ◽  
Price Earnings Ratio

There has been previous empirical research on corporate governance and board of directors which focused on attempting to find a direct relationship between internal governance variables and firm valuation. It has however also been argued that there are differences in the nature, direction, magnitude and processes of operation of this relationship between developed and developing financial markets because of differences in their respective economic, social, regulatory framework and market behaviour . This study examines this relationship in the context of the United Arab Emirates (UAE) as one of the emerging markets in order to extend evidence further beyond the western developed capital markets into the Middle East. Does the prevalence of family-ownership in the UAE for example matter to the company valuation? What about the presence of institutional ownership or ownership concentration? And do the corporate communication and disclosure scores published by the UAE Institutional Investor in cooperation with Hawkamah, The Institute for Corporate Governance; have any relationship to corporate valuation? More specifically this study, using multiple regression analysis, examines the impact of firm level internal corporate governance indicators namely board structure, ownership structure, and transparency and disclosure governance practices on the valuation of listed companies in the UAE after controlling for company size, industry, leverage, and dividend payout using Tobin’s Q, Price - Earning Ratio (PER) and Price - Book Value Ratio (PBVR) as surrogates for company valuation. The results show no significant relationship between internal corporate governance indicators and company valuation when using Tobin’s Q and PBR as measures of company valuation. However they reveal statistically significant links between some of the internal corporate governance indicators on the one hand and company market valuation on the other when company valuation is measured by the price earnings ratio (PER) which is one of the most common and important stock market indicators for investors. These results suggest that the company valuation measures like the price earnings ratio which explicitly reflects the financial markets assessment of the firm investment and dividend policies lead to a better correlation with internal corporate governance indicators. Moreover, the regression results indicate that the frequency of board meetings, adoption of best transparency practices and the presence of private institutional investors such as sovereign wealth funds are the most significant internal corporate governance variables in accounting for differences in company market values in the UAE. The structural aspects of the board such as size and composition turned out not to be statistically significant in their impact on company valuation.

Sign in / Sign up

Export Citation Format

Share Document