PERTANIKA JOURNAL OF SOCIAL SCIENCES AND HUMANITIES

The expansion of the Saudi economy depends on the financial markets. This study examines the relationship between corporate governance and the performance of financial institutions listed on the Saudi Stock Exchange from 2013 to 2022 using Tobin’s Q framework and a social science lens. The approach used in the study incorporates aggregated data from ten financial institutions and eleven insurance companies. Structural Equation Modelling (SEM) is advised for evaluating how corporate governance attributes influence the performance of Saudi financial institutions. Financial institution performance, the dependent variable, is assessed using the return on assets (ROA) and Tobin’s Q. Meanwhile, corporate governance factors serve as independent variables, encompassing various board and audit committee characteristics, as well as the financial institution’s size (Bank-Insurer). The results, derived through structural equation modelling (SEM), show that governance attributes significantly shape outcomes. Notably, board size, director independence, and audit committee structure are associated with adverse effects, whereas institutional size acts as a positive driver of performance in the Saudi financial sector.