The CEOs’ Characteristics and the Financial Policy of Saudi Public Companies

Abstract

The aim of this study was to test the difference in the financial policy of Saudi public companies that attributes to the characteristics of CEOs, using a sample of 35 public companies listed between (2012 – 2016).
The study used two measures of financial policy: the dividend ratio, and the debt ratio. The independent variables included four characteristics: age, sex, number of years of appointment of the executive director and educational level including the variables controlling the ratio of fixed assets and the size of the company.
Using the unit root tests such as Dickey-Fuller and Phillips Peron, multiple regression analysis, the results of the study showed that there was no statistically significant effect (at a significant level, α ≥ 0.05) of the sex of the CEO, the age of the CEO and the educational level on the financial policy of Saudi Public Companies. While there is a significant statistical effect (at a significant level, α ≥ 0.05) of the number of years of appointment of the executive Chairman and separate the posts of Chairman and Chief Executive Officer and the fixed assets ratio and the size of the company's assets on the financial policy of Saudi public companies as measured by the ratio of dividends.
The study recommended inviting Saudi companies to be more committed to the best practices of the executive Chairman because of the impact on the value of the company and the resolution of disputes and conflicts of interest. A comparative study is recommended of the characteristics of the executive Chairman on the financial policy between Saudi companies and Public companies from other countries.