Corporate Governance and Financial Compliance in Syrian Arab Republic: A Study of Firm Performance

Introduction

A recent study has shed light on the impact of corporate governance provisions on firm performance in Syria, a country that has been grappling with war and economic instability. The research analyzed data from all firms listed at the Damascus Securities Exchange (DSE) between 2011 and 2015.

Methodology

The study used multiple linear regression models to examine the relationship between corporate governance provisions and firm performance. A corporate governance index was built based on four key areas:

• Board of Directors: Composition, structure, and effectiveness of the board
• Audit: Audit committee composition, audit fees, and audit opinions
• Disclosure: Transparency in financial reporting, risk disclosure, and investor relations
• Ownership Structure: Shareholder composition, ownership concentration, and foreign ownership

Key Findings

The analysis revealed that:

• Ownership structure is the only significant corporate governance provision influencing firm performance.
• Foreign ownership is the main source of this positive impact on firm performance.
• The results held true for both measures of firm performance (Earnings Per Share (EPS) and Return On Assets (ROA)) as well as when taking into account the country’s political stability indicator.

Conclusion

The study provides valuable insights into corporate governance in a developing country with an emerging stock exchange, highlighting the importance of effective ownership structure in driving firm performance. The findings also underscore the significance of foreign ownership in influencing Syrian firms’ financial outcomes. By examining the impact of corporate governance provisions on firm performance during a period of crisis, this research contributes to our understanding of the complex relationships between corporate governance, ownership structure, and financial outcomes in Syria.