The impact of corporate governance on performance of companies listed on the Saudi Stock Market

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The adoption of corporate governance measures is generally accepted as a means of developing shareholder trust and confidence in the midst of economic shocks and volatile financial markets. The need for information is paramount in assessing the risk to investors and to the business. In Saudi Arabia, where family owned and controlled corporations proliferate, the urgency to adopt corporate governance measures is paramount to assuage the fears of the global investing market. The study determined that nearly all the indicators for measuring corporate governance do not significantly influence the financial performance of the 90 Saudi listed firms that comprised the research sample. The fact that many of these firms are owned by family groups is a possible explanation for this lack of significant relationship. Of the factors measured, only majority shareholder concentration proved to significantly influence the financial performance of Saudi firms as measured by the return on equity. …
.3 Corporate Governance in the Kingdom of Saudi Arabia 14 2.3.1 Corporate Governance Regulations in the KSA 15 2.3.2 Governance mechanisms in the Saudi bourse 15 2.4 Duties of Directors in the KSA 16 2.5 Recent developments in corporate governance in the KSA 17 2.6 Determinants of corporate governance 17 2.6.1 Ownership structure and concentration 17 2.6.2 Board size and composition 18 2.6.3 CEO Duality 19 2.7 Hypotheses 20 Chapter 3: Methodology 22 3.1 Overview 22 3.2 Research Design 22 3.2 Subjects of research, Population and Sample 23 3.3 Variables in the Study 23 3.3.1 Independent Variables 23 3.3.2 Dependent Variables 24 3.4 Instruments/ Measures 24 3.5 Data Collection 26 3.6 Data Analysis 26 3.7 Validity and Reliability 26 3.8 Research Model 27 3.9 Ethical Considerations 27 Chapter 4: Discussion 29 4.1 Overview 29 4.2 Results of quantitative data gathering 29 4.3 Results of qualitative data gathering 36 Chapter 5: Conclusion 38 5.1 Summary 38 5.1.1How corporate board of directors of listed Saudi companies view corporate governance, and how they implement it in their respective organizations 38 5.1.2Metrics that may be employed to determine the degree to which corporate governance initiatives impact upon corporate performance 39 5.1.3How corporate governance measures can be more effectively implemented in order to improve corporate performance 40 5.2Conclusion 40 5.3Directions for future research 41 References 42 Appendix 45 Chapter 1: Introduction 1.1 Overview The introductory chapter presents the research problem within the context in which it is conceptualized. The historical background is first related in order to explain the problem’s development and the need to address it. The research problem is objectively stated, followed by the research objectives and