Corporate governance and firm performance and value in Saudi Arabia

Abstract

This study investigates the relationship between corporate governance characteristics and firm performance and value of Saudi-listed firms using an index intended to capture the combined effect of firms’ corporate governance characteristics. Saudi Arabia's importance as an international market for investment is growing. Influenced by the recency of governance initiatives and large percentages of insider ownership, among other things, we predict and found that corporate governance and firm performance (measured as return on assets) are unrelated, but corporate governance and firm value (measured as Tobin’s Q and market value of equity) are positively related.   Key words: Corporate governance, Saudi Arabia, governance index, performance, value.