Boards of directors and firm performance: A study of non-financial listed firms on the Kuwait Stock Exchange

Financial crises around the world beginning in 1997, the year of the Asian crisis, and extending to the current coronavirus pandemic have helped governments understand that strong corporate governance rules reduce the impact of these crises. Robust corporate governance rules lead to strong shareholders’ rights, strong boards of directors, high levels of disclosure, high levels of auditing, and low levels of corruption. Thus, having strong corporate governance rules will protect firms and economies in general in the face of financial crises. Several studies from developed and developing countries have found that robust corporate governance principles lead to improvements in both firm performance and value. Corporate governance employs two mechanisms: internal mechanisms, which include ownership structure, boards of directors, and financial policies, and external mechanisms, which comprise the legal system, labor rules, market law, and financial accounting standards. This study will examine the impact of boards of directors on firm performance from 2017 to 2019 using a sample of 89 non-financial listed firms. This period was selected because, prior to 2017, there were no governance rules in Kuwait, as documented in Appendix, Table A.1. The situation now is obviously different, and these changes provide this study with strong motivation to examine the impact of boards of directors on firm performance following the implementation of the new rules. The selection of Kuwait for this study is of great interest for three reasons. First, Kuwait was the last of the Gulf Abstract