Board Diversity and Governance Quality in the MENA Region: Survey Evidence from Egyptian Listed Firms
DOI:
https://doi.org/10.51325/k9eenm51Keywords:
Board Diversity, Corporate Governance, MENA, Egypt, PLS-SEM, Gender DiversityAbstract
This paper explores the relationship between board diversity and governance quality in listed companies in Egypt, the largest Arab economy, and a setting of intensifying governance reform efforts and persistent governance challenges across the broader Middle East and North Africa (MENA) region. Based on primary survey data from 214 senior executives, board members, and audit committee chairs in 67 companies listed on the Egyptian Exchange, we develop and test a structural model linking four dimensions of board diversity (gender, educational background, nationality, and tenure heterogeneity) to three governance quality outcomes (board monitoring effectiveness, strategic decision quality, and stakeholder orientation). The study uses Partial Least Squares Structural Equation Modelling (PLS-SEM) with reflective measurement models and tests common method bias using Harman’s single-factor test. We find that both gender and educational diversity are the strongest positive predictors of governance quality in all three dimensions of the outcome. We also find a non-linear relationship between nationality diversity and monitoring effectiveness, with positive effects at moderate levels but decreasing returns at high levels. Tenure heterogeneity is significantly positively related to strategic decision quality and negatively related to board monitoring effectiveness, consistent with arguments on the trade-off between experiential richness and the entrenchment of long-serving directors. Several of these relationships are moderated by institutional ownership concentration and family control, which are both highly prevalent in the Egyptian corporate context and illuminate the distinctive governance dynamics of family-dominated MENA business systems. In this paper, we contribute to the comparative corporate governance literature by providing the first large-sample survey evidence on board diversity and governance quality in the Egyptian context and by developing theoretical arguments on the ways distinctive features of MENA institutional environments are shaping the diversity-governance relationship.
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