The Dark Side of CEO-Board Integration: Power Dynamics in Arab ‎Boards and Their Performance Agency Cost Implications

  • Authors

    • Shehabaddin Abdullah Abdulwadod Al-Dubai‎ Department of Accounting, School of Business, King Faisal University, Al-Ahsa, Saudi Arabia
    https://doi.org/10.14419/vzr0zp90

    Received date: June 18, 2025

    Accepted date: July 17, 2025

    Published date: July 26, 2025

  • Corporate Governance; Powerful CEO; CEO Board Membership; Board Effectiveness; Board of ‎Directors; Board Meetings; Board Size; Board Independ-ence; Agency Cost; Firm Performance; Arab; ‎Gulf Cooperation Council GCC.

  • Abstract

    This study examines the moderating impact of a powerful CEO on the relationship between ‎board effectiveness and measured by meetings, size, and independence, and agency cost (proxied ‎by asset turnover ratio) and firm performance (measured by earnings per share (EPS)). Using an ‎unbalanced dataset of 295 firm-year observations from listed companies in nine Arabic countries ‎‎(2019–2023), Hausman-Taylor estimations address endogeneity concerns. The results show that ‎powerful CEOs are positively associated with firm performance but have no direct impact on ‎agency costs. Board meetings are positively linked to firm performance but not to agency costs, ‎whereas board size and independence show no direct effects. Importantly, a powerful CEO ‎significantly moderates the relationship between board meetings and agency costs, with frequent ‎meetings under powerful CEOs leading to higher agency costs. Firms should consider separating ‎the CEO and board roles and adopt safeguards, such as independent lead directors, strict meeting ‎agendas, and confidential sessions, to strengthen board independence‎.

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    Al-Dubai‎, S. A. A. . (2025). The Dark Side of CEO-Board Integration: Power Dynamics in Arab ‎Boards and Their Performance Agency Cost Implications. International Journal of Accounting and Economics Studies, 12(3), 240-254. https://doi.org/10.14419/vzr0zp90