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Title: An investigation into the relationship between corporate governance and firm performance in Saudi Arabia after the reforms of 2006
Author: Al Mulhim, Abdullah
ISNI:       0000 0004 8497 6579
Awarding Body: Royal Holloway, University of London
Current Institution: Royal Holloway, University of London
Date of Award: 2014
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Corporate governance is one of the most important topics in the business world, especially in developing countries. Solid corporate governance gives investors more confidence to invest their money in the markets of developing nations. Scholars have argued that the existence of good corporate governance regulations is a fundamental factor for the protection of the capital market from financial collapse. It is also widely believed that good corporate governance achieves better firm performance. This study aims to answer the question of whether a relationship exists between corporate governance mechanisms and the performance of non-financial firms listed on the Saudi Capital Market. As there was a major reform of corporate governance in Saudi Arabia in 2006, the study examines the period 2007-2011, to investigate the impact of the reform. Furthermore, this study seeks to explore the understanding of the concept of corporate governance in the Saudi Arabian environment among different stakeholders, and to evaluate current regulations of corporate governance. This thesis uses two approaches to answer these research questions: quantitative methods (OLS, 2SLS, and GMM), and qualtitative methods (semi-structured interviews). The researcher employed triangulation to link and enhance the results, as well as to provide more details and explain the concept of corporate governance in Saudi Arabia, adding credibility to the findings of the quantitative results. According to the OLS regression, the findings suggest that the corporate governance mechanisms have produced mixed results on firm performance. Most of the governance mechanisms were found to have positive relationships with performance. However, other variables such as family or individual ownership and foreign ownership have a negative effect on performance (based on Return on Assets). According to the 2SLS regression, results regarding corporate governance mechanisms were consistent with the OLS results. To ensure confidence in these estimates, the researcher applied the dynamic GMM to address the issues of endogeniety and unobserved heterogeneity. The dynamic GMM found that some corporate governance is driven by unobserved heterogeneity and dynamic endogeniety, such as royal family board members, board sub-committees, financial firm ownership, and non-financial firm ownership. The main findings of the semi-structured interviews supported the quantitative results with greater detail and explanations. In addition, the semi-structured interviews seek to explore the concepts, definitions, and importance of corporate governance in Saudi Arabia's environment. Lack of awareness, cost, and time are the most frequently faced difficulties and obstacles that interfere with corporate governance in Saudi Arabia. Furthermore, the participants suggest that disclosure and transparency are needed to improve and develop in the listed companies.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available