Board of directors and financial performance in the Middle East

This study seeks to trace dimensions through which corporate governance characteristics influence the financial performance of family owned businesses. Between the periods of 2009-2011, we examined 160 Lebanese family owned firms that were equally divided between a control and an experimental group. Using a multiple logistic regression between a proxy ratio of financial distress and three exogenous variables of corporate governance, we found evidence of the attribute of boards' composition to firm's failure; the presence of outside directors seemed to have no role in the financial distress and insider ownership decrease the likelihood of financial distress but CEO duality increases the same probability of family owned firms in Lebanon. Our findings may well urge Lebanese investors and regulators toward the implementation of governance practices, to enhance the performance in one of the pillars of every local economy.