Opening of the Market for Foreigners Impact the Corporate Governance Policies and Practice in Saudi Listed Companies

Impact the Corporate Governance Policies and Practice in Saudi Listed Companies

1.0 Introduction

Corporate governance and accountability risks encountered by boards of directors have escalated sharply in recent years, where shareholder and corporate governance activism represents an increasingly critical and complex are of focus for the publicly traded companies (Fischel, 2014). The board of directors have found themselves under pressure from proxy advisory firms  and shareholders to ensure good governance actions, while at the same time ensuring that the established structure of corporate governance allows them to deal with activists campaign or takeover attempts in a manner that protect the value of the long term shareholder. In the wake of corporate disasters such as WorldCom and Enron in USA, it has become more vital than ever to make sure that companies have correct checks and balances in place to prevent wholesale fraud or office abuse. The role played by executive officers, individual directors, board committees, and board of directors in ensuring sustainable and effective corporate governance has always been challenging. Rulemaking bodies have come up with different regulations to protect corporate stakeholders and shareholders and to improve transparency.

There is single definition for corporate governance but it broadly describes practices, process and structures through an organization manages its works, affairs, and business to meet its strategic, operational, and financial goals and attain long-term sustainability (Clarke, 2007). It serves as a system that guides control and directing in an organization. The structure of corporate governance specifies distribution of responsibilities and rights among different stakeholders an entity, such as managers…………………

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