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Factors Associated With Firm Performance: Empirical Evidence From The Kingdom Of Saudi Arabia

Author

Listed:
  • Abdullah Mohammed Alzharani
  • Ayoib Che-Ahmad
  • Khaled Salmen Aljaaidi

Abstract

This study investigates the relations between agency cost variables (firm size, leverage and auditor type) and the firm performance of 392 listed companies in the Saudi Stock Exchange (Tadawul) during 2007- 2010. This study identifies two measurements of the firm performance: (1) ROA and (2) ROE. Using the multiple regression, the results of this study show that the likelihood a firm performance (ROA) is significantly affected increases with the firm size. On the other hand, leverage and auditor type have no influence on the firm performance. Interestingly, the explanatory power of firm performance (ROA) model is high. Somewhat surprisingly, model (2)'s explanatory power is insignificant indicating to the inability of the proposed variables (firm size, leverage and auditor type) in explaining the expected effect on firm performance (ROE).

Suggested Citation

  • Abdullah Mohammed Alzharani & Ayoib Che-Ahmad & Khaled Salmen Aljaaidi, 2012. "Factors Associated With Firm Performance: Empirical Evidence From The Kingdom Of Saudi Arabia," Accounting & Taxation, The Institute for Business and Finance Research, vol. 4(2), pages 49-56.
    • Handle: RePEc:ibf:acttax:v:4:y:2012:i:2:p:49-56
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    References listed on IDEAS

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    More about this item

    Keywords

    ROA; ROE; Kingdom of Saudi Arabia;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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