Corporate governance practices in Saudi joint stock listed companies : prioritization of characteristics with AHP and statistical analysis

Abstract

Today, corporate governance is seen as one of the most important topics in the contemporary business world and it has been introduced in the 1980s’ literature as a mechanism to improve accountability, efficiency, transparency and effective corporate management in business environment. Moreover, the corporate governance is categorized as one of the key determinants of the sound enterprise system, since it has the capacity to mitigate economic hits and it shows how the individual elements of the organization are linked together to improve that system. Saudi authorities have recalled corporate governance as a corruption uprooting tool and an approach to create sustainable business across the world. The Saudi Vision 2030 requires that the company directors, management and other stakeholders should acquire the strategic vision on good corporate governance practices, particularly the economic development as a crucial element in Vision 2030. This study aims at identifying and prioritizing the characteristics that are expected to enhance effective corporate governance practices in Saudi joint stock listed companies. This research adopted a sequential mixed method (qualitative followed by quantitative) approach to pursue the research objectives. The quantitative phase was implemented following an approach usually adopted in a case study research. The findings resulted from the qualitative analysis explained that 16 characteristics were identified as positively enhance governance practices in Saudi joint stock listed companies. The results obtained from the quantitative part showed that board independence is relatively the most important characteristic while ownership structure is the least important in enhancing good governance practices in Saudi listed companies. Finally, the overall findings resulted in developing a new model for effective corporate governance practices in Saudi listed companies.