The Moderating Role of Organizational Culture on the Relationship between Corporate Governance Dimensions and Financial Performance in Saudi Manufacturing Industry: A Theoretical Framework

Ezdihar  Aldriweesh; Norhayati Zakuan; Norkhairul Hafiz Bajuri; Akram  Mufareh Alshammakh

Corporate governance (CG) is critical in developing a corporate culture of awareness, transparency, and openness. Despite this, previous studies have not yet reached an agreement on the most important dimensions of CG implementation and their correlation with the financial performance of financial and non-financial companies, and there is a scarcity of studies that examined variables such as organisational culture (OC) that could improve CG implementation and their relationship with firm financial performance, particularly in developing countries. This paper provides a brief overview of the dimensions of CG implementation, which are board properties, audit committee characteristics, and transparency and disclosure as the most important dimensions of CG implementation, and their impact on financial performance in developing-country manufacturing firms. Furthermore, the purpose of this study is to look into the role of OC as a moderating variable in the relationship between the implementation of CG dimensions (board properties, audit committee characteristics, and transparency and disclosure) and the financial performance of manufacturing firms in developing countries. A conceptual model was developed for this study based on previous literature, revealing that there is a theoretical correlation between board properties, audit committee characteristics, and transparency and disclosure as main dimensions of CG implementation and financial performance in developing countries' manufacturing firms, most notably, this study also theoretically demonstrated the role of OC as a primary determinant in affecting the association between CG dimension implementation and financial success in manufacturing enterprises in developing countries. However, to explore correlations in the suggested model, these theoretical conclusions require a survey of a sample of executive directors in manufacturing enterprises in a developing country such as Saudi Arabia. Based on the theoretical findings of this study, this study contributes to raising awareness among manufacturing business managers in developing countries about the importance of CG dimensions and OC in enhancing their companies' financial performance. Furthermore, the current study is regarded as a foundation for future research and studies, particularly in the context of CG, OC, and financial performance in manufacturing enterprises in developing nations.

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In-Text Citation: (Aldriweesh et al., 2022)
To Cite this Article: Aldriweesh, E., Zakuan, N., Bajuri, N. H., & Alshammakh, A. M. (2022). The Moderating Role of Organizational Culture on the Relationship between Corporate Governance Dimensions and Financial Performance in Saudi Manufacturing Industry: A Theoretical Framework. International Journal of Academic Research in Accounting Finance and Management Sciences, 12(4), 208–227.

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The Moderating Role of Organizational Culture on the Relationship between Corporate Governance Dimensions and Financial Performance in Saudi Manufacturing Industry: A Theoretical Framework

Ezdihar Aldriweesh, Norhayati Zakuan, Norkhairul Hafiz Bajuri, Akram Mufareh Alshammakh

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