Governance in crisis: do different types of ownership influence firm performance in GCC countries amid Covid-19?

Abstract

This research examines how various ownership composition, such as royal, family, state, director, foreign, and block-holders, affect the performance of firms in the GCC region during the Covid-19 pandemic. The sample includes 373 non-financial GCC firms and the research uses the OLS regression technique with data from 2020 to 2023. To fix the endogeneity, a ‘two-step system GMM estimation’ was adopted. The analysis found that family, block-holder, and director ownership of Covid-19 had a favourable impact on ROE, whereas royalty and state ownership had a negative impact. Regarding Tobin’s Q, the findings revealed that family ownership was substantial and positive, whereas block-holder, royal, and foreign ownership were significant and negative. The findings of this work are significant for investors, regulators, and management, particularly those seeking to improve a company’s capital market performance through ownership changes during crises in emerging economies such as the Covid-19 outbreak. The study’s outcomes provide authorities with insights into how they might regulate and monitor corporate activity, particularly amid unpredictable market conditions. To the authors’ knowledge, this is the first study to look into the influence of diverse ownership arrangements on business performance in the context of Covid-19 in emerging countries such as the GCC.