International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

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 Volume 11, Issue 4 (April 2024), Pages: 216-227

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 Original Research Paper

Impact of Saudi corporate governance code and governance structures on industrial firms' performance in Saudi Arabia

 Author(s): 

 Fatma Zehri, Ichraf Ben Flah *

 Affiliation(s):

 Department of Accounting, College of Business, Al Imam Mohammad Ibn Saud Islamic University, Riyadh, Saudi Arabia

 Full text

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 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0009-0005-7651-9209

 Digital Object Identifier (DOI)

 https://doi.org/10.21833/ijaas.2024.04.023

 Abstract

This research focuses on examining how the recent Saudi Corporate Governance Code (SCGC) and internal governance structures within companies affect the performance of industrial firms listed on the Saudi Stock Exchange. The authors studied 62 industrial firms from 2012 to 2020. They analyzed data using two models to test their hypotheses, looking at firm performance through two financial indicators: return on assets (ROA) for the first model and return on equity (ROE) for the second. Both models considered the same factors: SCGC, the size and independence of the board, the size and independence of the audit committee, how often the audit committee meets, and how concentrated the ownership is. The results indicated that applying the SCGC leads to better company performance based on ROA. However, there was no noticeable impact on performance from the board or audit committee size. Likewise, having more audit committee meetings did not improve performance. On the other hand, the independence of the board and audit committee, along with ownership concentration, did have a positive effect on performance. This study adds to the discussion on the economic impacts of the SCGC in the Saudi market, offering valuable insights for companies, investors, and policymakers like the Capital Market Authority (CMA) and the Saudi Organization for Chartered and Professional Accountants (SOCPA). These insights could guide adjustments to the SCGC that better suit the unique aspects of the Saudi market.

 © 2024 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

 Saudi corporate governance code, Firm performance, Industrial listed companies, Corporate governance structures, Saudi stock exchange

 Article history

 Received 2 December 2023, Received in revised form 11 April 2024, Accepted 18 April 2024

 Acknowledgment 

No Acknowledgment.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Zehri F and Flah IB (2024). Impact of Saudi corporate governance code and governance structures on industrial firms' performance in Saudi Arabia. International Journal of Advanced and Applied Sciences, 11(4): 216-227

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 Tables

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