This study examines the impact of ownership structures on financial performance in Saudi-listed firms, incorporating Environmental, Social, and Governance (ESG) performance as a moderating variable. Using panel data from 134 firms between 2019 and 2023, the study applies Fixed Effects (FE) and Generalized Method of Moments (GMM) estimations to address firm-specific heterogeneity and endogeneity concerns. Financial performance is measured through Return on Assets (ROA), Return on Equity (ROE), and Earnings per Share (EPS), while ownership structures include institutional, foreign, CEO, and government ownership. The findings reveal that institutional and foreign ownership positively impact financial performance, reinforcing Agency Theory's argument that external investors enhance governance mechanisms. CEO ownership shows a positive but weaker effect, aligning with Stewardship Theory, while government ownership has a mixed impact, benefiting firm stability but not necessarily profitability. ESG significantly moderates the relationships, amplifying the positive effects of institutional and foreign ownership while mitigating inefficiencies associated with government ownership. Robustness checks confirm the validity of the results, with Fixed Effects controlling for firm-specific variations and GMM estimation addressing endogeneity biases. The study's implications highlight the importance of ESG integration in corporate governance, offering insights for investors, policymakers, and corporate leaders under Saudi Vision 2030. Future research should explore additional governance variables and extend the analysis to other Gulf Cooperation Council (GCC) markets.
Sharawi et al. (Sat,) studied this question.
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