Corporate Governance Practices and Firm Performance of Listed Companies Including Islamic Financial Institutions in the United Arab Emirates

Corporate governance is considered to have significant implications for the growth prospects of an economy. Well-formulated corporate governance mechanisms are regarded as important not only in reducing risk for investors, but also in protecting shareholders’ value as well as in improving and enhancing a firm’s performance. However, corporate governance mechanisms do vary between countries, as each country is unique in its political, economic, legal, culture and social contexts. Each country has its own corporate governance regulations with respect to various aspects of corporate management, which come under public domain. The United Arab Emirates (UAE) also has its own corporate governance rules introduced in 2010. The results of the study reported here evaluate the consequences of compliance with different components of the rules by UAE firms. The conclusions of the study lead to some recommendations to the UAE regulatory authorities. The purpose of this study was to investigate the extent of compliance with various components of corporate governance rules of 2010 and their relationship between corporate governance practices and performance of financial and non-financial firms and conventional and Islamic banks in the context of the UAE. The study investigated the impact of the implementation of 2010 corporate governance rules and the extent of changes to corporate governance practices two years later (in 2012). During this period, firms that operated in the UAE were experiencing the impact of the global financial crisis of 2008-2009 and its aftermath.