Practice and effectiveness of internal corporate governance mechanisms in Saudi Arabia Stock Market: A review of empirical evidence

Longitudinal approach to the study of corporate governance code and earnings management relationship: the case of Saudi Arabia

“…This value is slightly lower than 0.1621 reported in a similar study by Al-Thunebat et al (2016) in Saudi Arabia, which indicates that EM levels in public companies have dropped slightly. For panel B, board independence (BDIND) variable mean is 71.3% of non-executive directors on the board, and similar to the finding by Marai et al (2017), suggesting that Saudi Arabian companies are broadly in line with the 2018 SACGC. Most of the companies comply with this provision when the code became mandatory in 2010.…”

“…This is necessary to enhance fairness, transparency and credibility of the financial reporting process. Nevertheless, the finding of this analysis is an improvement on the results of some earlier studies (Marai et al, 2017;Al-Thuneibat et al, 2016) No No Yes Note(s): "**"Correlation is significant at the 5% level; "*"correlation is significant at the 10% level. Where; all definitions are as given in equations ( 4) and (5) 6.3.1 Board independence and earnings management.…”

“…These studies are contextualized in developed economies, and therefore, their findings might have limited generalization particularly in the case of developing economies, such as Saudi Arabia with unique features. This paper builds on previous studies (Marai et al, 2017;Al-Thuneibat et al, 2016), but this time focussed on four key internal governance monitoring mechanisms specified in the 2006/ 2018 SACGC: board independence, chief executive officer (CEO) dominance (duality), AC meetings, the board size and ownership structure because of the context of the study; that are likely to be involved in monitoring corporate managers' financial statement preparation and reporting decisions. Generally, it is perceived that CG codes might help address CG issues especially as it relates to corporate responsibility, transparency and accountability (Hussainey and Al-Najjar, 2012) and thereby help to regulate the affairs of public companies not only in advanced economies but also in developing countries (Christensen et al, 2015).…”

The effect of board composition and managerial pay on Saudi firm performance

“…It is widely known that control variables can influence and thus correlate with firm performance. Therefore, including control variables is expected to improve estimates, while also eliminating the omitted variable bias that has been noted to affect previous studies; see MacAvoy et al (1983), Baysinger and Butler (1985), and McConnell and Servaes (1990) for details. In consideration of the advice in these studies, I utilise the control variables in Table 1, Panel C. Note that the natural logarithm of ASSETS as a measure of firm size means larger firms are more likely to have a higher number of outside directors on their boards because they require more outside expertise and because they tend to benefit from more extensive monitoring and evaluation.…”

Corporate Governance Development and Practices in an Emerging Economy: A Review of Empirical Findings and Literature in Saudi Arabia

“…The findings indicate that independent members on boards, larger audit committee members and larger boards are negatively related to financial volatility, but noted that compliance with CSR alone does not explain the financial volatility, but should be in concert with other CG variables. Marai et al (2017) specifically examined the Saudi corporate CG code, and to assess its effectiveness, using annual financial reports for the period from 2007 to 2014. The main findings show that the provisions of Saudi CG code are adequate to address CG issues and a relative increase in compliance level for the period studied.…”