Effect of market and corporate reforms on firm performance: evidence from Kuwait

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Following the global financial crisis in 2008, many countries have introduced economic and corporate reforms to assure fair markets and mitigate the risk of management misconduct. In this context, Kuwait has implemented two new major laws to restructure its capital markets and improve corporate governance. The two laws ere the Capital Market Authority Law (CMAL) and Kuwait Companies Law (KCL). In this paper, the authors sought answers to two questions: (1) has the performance of the listed companies changed in response to the enforcement of the laws? and (2) was there a direct influence of the laws on that change? The authors found some evidence of significant change in performance. Moreover, they provide evidence of KCL viability as a determinant of better performance. Interestingly, CMAL was found to be inadequate for improving firm performance. Implications and recommendations for further research are provided.

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    • Figure 1. Plot of means before and after CMAL
    • Figure 2. Plot of means before and after KCL
    • Table 1. Summary results of the mean and standard deviation before and after CMAL
    • Table 2. Summary results of the mean and standard deviation before and after KCL
    • Table 3a. Mann-Whitney U test with CMAL grouping
    • Table 3b. Mann-Whitney U test with KCL grouping
    • Table 4. Summary of hypotheses testing results based on KCL
    • Table 5. Summary of hypotheses testing results based on CMAL
    • Table 6. Results of unit root test of stationarity
    • Table 7. GLS panel data regression for the banking sector
    • Table 8. GLS panel data regression for the investment sector
    • Table 9. GLS panel data regression for the insurance sector
    • Table 10. GLS panel data regression for the real estate sector
    • Table 11. GLS panel data regression for the industrial sector
    • Table 12. A summary of the resulting signs of all significant effects