This paper examines if there exists a long run relationship among five macroeconomic variables, consumer price index, industrial output, money supply, exchange rate, oil prices along with the global stock prices proxy Standard and Poor 500 index and Saudi all share stock index. Time series analysis is applied using monthly data from January 1994 to June 2013. Application of Johansen cointegration test finds the existence of a long run relationship among the chosen variables. All macroeconomic variables are found to impact stock prices. Standard and Poor 500 index does not affect Saudi stock prices. Vector error correction model shows the presence of long run causality from the explanatory variables to the stock prices. Short run causality test finds a two-way causality between stock prices and oil prices. Impulse response function shows that industrial production shocks pushes up stock prices while consumer price index shocks pulls it down. Variance decompositions show that historical stock prices are the major driver of Saudi stock prices. This implies that Saudi stock market follows weak form of market efficiency. The results of this paper have important implications for the investors in Saudi stock market.

The study investigates the association between CEO education and firm performance with a sample of 85 nonfinancial firms listed on the Saudi stock exchange during 2018 applying ordinary least squares method. CEO education is defined by three variables, the level of education, if the degree-granting institution is domestic or foreign, and if the highest degree is in management or other fields of study. Financial performance is measured by return on assets and return on equity. Firm size, age, liquidity and growth are introduced as control variables. The study shows that 58 CEOs of the firms studied are graduates, 38 have obtained their degree from a domestic institution and 44 have a management degree. Graduate CEOs are found to enhance performance. Graduating from a domestic institution influences performance positively. Management degree of CEO does not seem to impact performance. Firm size, liquidity and growth are positively associated with performance. Firm age does not explain performance differences of firms. Results are robust to performance measures. The findings of the study suggest that firms can benefit from a CEO hiring policy that emphasizes on the minimum qualification set as graduation or higher, education from a domestic institution and no undue weight on management qualification.

Study of stock market volatility has been the focus of financial economics. Modelling stock market volatility has great contributions to make in the areas of portfolio management, asset allocation, risk management, etc. We estimate the conditional volatility of Saudi stock market by applying AR (1)-GARCH (1, 1) model to the daily stock returns data spanning from August 1, 2004 to October 31, 2013. We show that a linear symmetric GARCH (1, 1) model is adequate to estimate the volatility of the stock market of the country. We find that Saudi stock market returns are characterised by volatility clustering and follow a non-normal distribution. Saudi stock market returns show a time varying volatility, show persistence and are predictable. Past volatility impacts the current period volatility and past returns play a role in determining the current period return. Saudi stock market is nervous in its reactions to market fluctuations. This finding of the study offer important input into the decisions relating to asset allocation and risk management strategies of investors and treasury managers in Saudi stock market.

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