Corporate Governance Index for Saudi Firms

Abstract

This paper constructs a Corporate Governance Index, CGI for all Saudi listed firms in Tadawul, 2016. Based on Four Corporate Governance categories: the board of directors; the shareholders’ rights and general assembly; the public disclosure and transparency; and stakeholders, we find that the cumulative corporate governance score for Saudi listed firms ranges from 45 to 91 points out of 100. The mean value was 67 points for all firms with a standard deviation of 8%. This indicates that Saudi firms vary significantly in corporate governance practices. Investigating the four categories separately show that Saudi companies are doing well in general in the board of directors and shareholders as compared with public disclosure and stakeholders’ categories.

Keywords: Corporate governance; Index, Board of directors, Shareholders rights, public disclosure and transparency