DOES CORPORATE GOVERNANCE MATTER TO IMPROVE THE FINANCIAL DECISIONS OF TEXTILE SECTOR IN SAUDI ARABIA: MODERATING ROLE OF FIRM SIZE

Abstract

This study aimed to examine the impact of corporate governance mechanisms on the capital structure of publicly listed textile companies in Saudi Arabia, emphasizing the moderating role of firm size. Quantitative data from annual reports spanning 2014-2023 were analysed using a longitudinal design and panel data in STATA. Results from the Fixed Effect model indicated that corporate governance indicators, including board size, composition, remuneration, CEO compensation, and independence, negatively and significantly influenced the capital structure of Saudi textile companies. The study also revealed a notable negative and statistically significant moderating effect of firm size on the relationship between corporate governance indicators and capital structure. Integrating theoretical frameworks with empirical analysis, this research contributes to theoretical understanding and provides practical insights for firms, policymakers, and investors to enhance corporate governance practices and optimize capital structure decisions across diverse organizational contexts. The study concludes by acknowledging its limitations and proposing directions for future research.