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The mediating role of firm risk: The case of the insurance sector in Saudi Arabia

Author

Listed:
  • Alsuyayfi, Shanar Shafi

    (PhD student, UKM Graduate School of Business, Universiti Kebangsaan, Malaysia)

  • Ja'Afar, Roslan

    (UKM Graduate School of Business, Universiti Kebangsaan, Malaysia)

  • Said, Rasidah Mohd

    (UKM Graduate School of Business, Universiti Kebangsaan, Malaysia)

  • Albada, Ali

    (Faculty of Business, Sohar University, Oman)

Abstract

This study aims to examine the mediating effect of firm risk on the relationships between board structure and firm performance. The multivariate panel data regression technique is employed to analyse the mediating impact of firm risk on 27 listed insurance companies on the Saudi Stock Exchange (Tadawul) from 2016 to 2021. The findings of this study indicate that firm risk partially mediates the relationship between audit independence and Tobin's Q. In contrast to the existing literature, the study reveals that boards composed of independent members may lack effectiveness in their monitoring role, leading to higher risk-taking behaviour. This paper contributes to the literature on corporate governance and firm performance by examining the association through the lens of firm risk.

Suggested Citation

  • Alsuyayfi, Shanar Shafi & Ja'Afar, Roslan & Said, Rasidah Mohd & Albada, Ali, 2023. "The mediating role of firm risk: The case of the insurance sector in Saudi Arabia," Journal of Risk Management in Financial Institutions, Henry Stewart Publications, vol. 17(1), pages 106-116, December.
    • Handle: RePEc:aza:rmfi00:y:2023:v:17:i:1:p:106-116
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    More about this item

    Keywords

    firm risk; board structure; mediation; insurance sector; Saudi Arabia;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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