International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

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 Volume 9, Issue 6 (June 2022), Pages: 51-62

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 Review Paper

 Corporate governance and its impact on strategy diversification and growth in the Saudi non-oil sector

 Author(s): Marouan Boubaker Kouki *, Amani Mourad Kachoukh

 Affiliation(s):

 Department of Information System, Faculty of Computing and Information System, Northern Border University, Rafha, Saudi Arabia

  Full Text - PDF          XML

 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0000-0001-5699-0910

 Digital Object Identifier: 

 https://doi.org/10.21833/ijaas.2022.06.007

 Abstract:

The purpose of this article is to study the influence of internal governance mechanisms on the diversification and growth strategy of Saudi firms in the non-oil sector. Considering a sample of 70 Saudi companies observed over the period 2006-2014 and using the Linear Regression method, correlated panels, corrected standard errors (PCSEs). Our empirical results show the structure of the board of directors that motivates Saudi firms to run less risk and diversify all activities rather than refocus the group's activity. We have shown that the presence of the largest shareholder has a positive effect on the diversification strategy. These results support our basic assumptions that firms with a high concentration of capital favor diversification rather than the risk that accompanies the growth of the firm's overall activities. In line with our reasoning and consistent with previous research, our main contribution is that the control mechanisms are not neutral with regard to the diversification strategy. The verification of these assumptions in the Saudi context makes it possible to enrich the verification of the positive relationship between governance and the diversification of firms. 

 © 2022 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords: Ownership structure, Board characteristics, Diversification strategy, Growth, Entropy, Herfindahl

 Article History: Received 13 November 2021, Received in revised form 24 March 2022, Accepted 27 March 2022

 Acknowledgment 

The author wishes to acknowledge the approval and the support of this research study by grant No. CIT-2017-1-8-F-7516 from the Deanship of the Scientific Research in Northern Border University, Arar, KSA.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Kouki MB and Kachoukh AM (2022). Corporate governance and its impact on strategy diversification and growth in the Saudi non-oil sector. International Journal of Advanced and Applied Sciences, 9(6): 51-62

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