Board of Directors, Management Ownership, and Capital Structure and Its Effect on Performance: The Case of Palestine Securities Exchange

This manuscript offers an empirical investigation of three variables that have an effect on the financialperformance of the corporations listed in the Palestine Securities Exchange (PSE). The three variables are aboardof directors’ characteristics (size and composition), b- management ownership, and c- capital structure.Furthermore, this paper uses the same methodology as (Belkhir, 2009; Pesamaa, Klaesson, and Haahti, 2008;Ghosh, 2003; Dowen, 1995). It employs various statistical techniques to examine the hypotheses (descriptiveanalysis, and ordinary least square; simple and multiple regression). Besides, 28 Palestinian corporations wereselected for applying statistical analysis within four years 2005-2008. The results of the study indicate that theChief Executive Officer CEO-Chairman separation does not have any significant impact while theCEO-Chairman duality has a significant impact on the financial performance. Additionally, the paper finds outthat the board size has a significant negative impact on the financial performance. In addition, this paperconcludes a positive impact of management ownership on the financial performance. Finally, we conclude thatthe debt financing has no influence on the profitability of Palestinian corporations. Therefore, we recommend thePalestinian legislator to consider the findings of our paper when he decides to publish the Palestinian companyact. In the end, we hope that the Palestinian legislator to take in consideration the current model of Daraghmaand Alsinawi study when he issues the new Palestinian company law.