Saudi Cultural Missions Theses & Dissertations
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Item Embargo Evaluating Audit Quality through Audit Quality Disclosure: An Examination of Audit Committee Practices in Saudi Arabia(Royal Holloway, University of London, 2025-02) Almutawa, Waleed; Napier, Christopher; Stadler, ChristianThis thesis explores current practices that audit committee members and audit committee attendees (ACMs) from a developing nation, Saudi Arabia, perform when trying to evaluate the audit quality of the audit firm. It also examines current approaches and challenges encountered while utilizing Key Audit Matters (KAMs) and Transparency Reports (TRs), and the necessity for Audit Quality Indicators (AQIs) (referred to as the audit quality disclosure). I conducted semi-structured in-depth interviews with 29 ACMs and those who have influence over the practices of the audit committee. I used documents to triangulate different sources and add credibility and trustworthiness to the findings. Theoretically, the study draws on the institutional logics perspective to understand the logic behind the current practices and beliefs. This study found that ACMs mainly use signals and clues that are obtained through the public domain, proposals, private sources, interactions with the auditors, and audit outputs to assess audit quality. The findings clearly show the predominance of professional logic among the majority of ACMs, and naïve stakeholder logic among ACMs of small companies and ACMs who lack audit literacy in large companies. The majority of the study participants do not utilize KAMs and TRs and do not support disclosing AQIs as transparency logic tools for assessing audit quality, although some younger interviewees show some inclination towards them. This thesis aims to broaden our understanding of the crucial role that audit committees are expected to play, particularly in evaluating audit quality. This role was broadly investigated in the audit committee effectiveness literature before. Furthermore, existing research on KAMs and TRs has largely overlooked their use in evaluating audit quality. Additionally, the literature on AQIs is scant, focusing mainly on identifying suitable AQIs and assessing their impact. Thus, this study attempts to shed light on these neglected but important realms of research.24 0Item Restricted Do Expertise in Audit Committees Impact Audit Quality? Evidence from Saudi Arabia(Durham University, 2024-09-06) Alahmadi, Ammar; Chaudhry, GhafranThis dissertation investigates the impact of audit committee (AC) characteristics on audit quality (AQ), using audit fees as a proxy, within the context of Saudi Arabia’s top 100 publicly listed firms in 2023. The study is motivated by the increasing focus on corporate governance (CG) reforms, driven by a series of high-profile corporate failures globally and the evolving regulatory landscape in Saudi Arabia, particularly under Vision 2030, which aims to enhance transparency and governance standards and attract international investment. The primary aim of this research is to assess the influence of financial expertise within ACs on AQ, further distinguishing between accounting and non-accounting expertise, and to examine the impact of AC members holding multiple directorships. Using a quantitative approach, the study employs ordinary least squares (OLS) regression analysis to evaluate the relationship between AC characteristics and AQ, with data manually collected from the Tadawul Saudi Exchange Stock website, annual reports, and financial statements. The findings reveal a significant positive impact of AC financial expertise on AQ, as evidenced by higher audit fees. However, when expertise is segregated into accounting and non-accounting categories, neither type significantly impacts AQ, suggesting that the combined presence of diverse expertise enhances AQ more effectively. Furthermore, AC members holding multiple directorships also show a significant positive correlation with audit fees, indicating their broader governance experience contributes to more rigorous audit processes. This dissertation contributes to the literature by providing empirical evidence from an emerging market, highlighting the distinct roles of various types of expertise within ACs and introducing audit fees as a proxy for AQ in Saudi Arabia—a novel approach that diverges from traditional proxies such as earnings management and audit firm type. The findings have practical implications for regulators, policymakers, and firms seeking to enhance CG structures, aligning with Vision 2030’s goals of fostering international confidence and bolstering economic diversification through improved governance practices.20 0Item Restricted Can diversity in the audit committee mitigate the risk of financial misconduct and corruption? An Overview of Saudi Arabia Regulations.(King's College University, 2024-09-01) Alkhathlan, Norah Rashed; Banerjee, NigelThis dissertation explores the impact of professional diversity within audit committees on mitigating financial misconduct and corruption, focusing mainly on Saudi Arabia's Regulation. Recognizing the critical role of maintaining financial integrity, this study investigates how diverse audit committee compositions might improve financial oversight and decrease unethical behaviors. The research methodology combines a review of past incidents of corporate misconduct with an analysis of the legal framework, complemented by an examination of annual reports from Saudi companies to analyze the expertise and backgrounds of audit committee members. The results indicate that a mix of financial, legal, and industrial expertise within audit committees strengthens their ability to detect and address risks associated with financial misconduct and corruption. The dissertation recommends restructuring audit committees to consist of five members: three with financial skills, one with legal qualifications, and one with industrial experience. This recommended configuration aim to enhance the committee's effectiveness in adhering to legal standards and protect financial integrity. However, acknowledging the varied nature of companies in Saudi Arabia, an exception is proposed for small companies.36 0Item Restricted Impact of the Audit Committee’s Characteristics on Enterprise Risk Management, Internal Audit, External Audit and Firm Performance in Saudi Arabia(RMIT University, 2024-02-07) Almodawi, Abdulkareem; Safari, Maryam; Yapa, PremHighly visible corporate collapses in the early twenty-first century, such as those experienced by Enron and WorldCom in the United States, as well as OneTel and Harris Scarfe in Australia, were the catalysts for a simultaneous decline in investor confidence (Robins 2006). Concerns regarding the ideal composition of corporate boards and their committees have become more pronounced among various stakeholders, including investors, scholars, practitioners, and global regulatory bodies. This increased level of scrutiny aims to ensure effective decision-making processes and the creation of value (Kim et al. 2014; Masulis et al. 2012). In the broader discussion on board composition and its committees, a notable aspect that has emerged is board diversity (Bernile et al. 2018). One of the primary justifications for emphasizing board members' diversity is to advance social justice principles (Van Dijk et al. 2012). Nevertheless, scholars and governing bodies have also put forth arguments grounded in the realm of economics. To illustrate, the presence of a varied collection of individuals within a specific group can counteract the occurrence of 'groupthink', a phenomenon associated with the Enron collapse (O'Connor 2002) and the Volkswagen emission problems (Glebovskiy 2019). Analyzing this matter through a lens of reliance on resources (Salancik and Pfeffer 1978), diversity expands the array of skills, capabilities, and expertise that a board and its committees can access. One important facet of corporate governance is the audit committee (AC), which oversees internal and external auditing and enterprise risk management. The enactment of the US Sarbanes-Oxley Act of 2002 brought about more stringent requirements regarding the AC's independence. Consequently, there was a decrease in the traditional ties between the board of directors and their committees or with executive management (CEOs). Nonetheless, in organizations where audit committees witnessed a reduction in members who had established ties to the CEO, approximately 24% of these vacancies were filled by individuals who possessed social affiliations. This emerging pattern raises concerns regarding the escalating significance of these informal associations within AC as an alternative, unregulated channel through which influence may be exerted on the AC's activities (Hwang and Kim, 2012). Bernile et al. (2018) Chen et al. (2017) found that diversity in the board of directors and its committees positively impacts the companies and reduces the agency problem. In Saudi Arabia, customary practices privilege familial and friendly relationships, which subsequently could impact an organizations' operational mechanisms (Common 2013). The bestowal and receipt of ‘wasta’ (roughly translated as nepotism) occurrs within networks of extended kinship and frameworks of organizations. Saudi Arabian managers exist within a cultural milieu in which social and professional ties assume significant and influential roles in institutional and group dynamics. Besides tribal, clan, and family loyalties, religion is the primary authority source in Saudi Arabia (Nevo 1998). The Muslim world is a society characterized by deep-rooted conflicts surrounding the notions of patriotism and territoriality (Nevo 1998). It is deemed that in all Arab nations, Wasta is deeply ingrained in the culture and influences every choice (Cunningham and Sarayrah 1993). Several academics have written about the Wasta phenomenon in Arab nations in the last ten years (Alenzi 2017; Alreshoodi 2016; Barnett et al. 2013; Cunningham and Sarayrah 1993; Harbi et al. 2017; Hutchings and Weir 2006; Tlaiss and Kauser 2011). According to Hutchings and Weir (2006), Wasta may be of utmost relevance regardless of an organization's objectives and track record. Strong social bonds have been established in Saudi Arabia through personal relationships and family status. Wasta access has a direct bearing on the hiring and advancement of individuals who have strong ties to their families (Alreshoodi 2016). This study aims to examine the impact of Saudi's unique socio-cultural relationships (social ties), namely regionalism and tribalism, kinship, and wasta, and professional ties among AC members on AC responsibilities (ERM, IA, EA) and then the impact of AC performance on firm performance. The researcher presents the perspectives, opinions, and experiences of AC members regarding their social and professional ties and how they affect AC performance. Then, the researcher considers how AC performance affects firm performance (FP). The study employs a mixed methodology of semi-structured interviews and surveys. This study contributes to the knowledge and literature on audit committees and corporate governance. It may have implications for policymakers, regulators and other government and business officials responsible for corporate governance and its implementation in Saudi Arabia. The findings indicate that pre-existing social ties among AC members, as opposed to a merit-based selection procedure, have a negative effect on AC performance. In contrast, professional ties have a positive impact on AC performance. Moreover, AC performance has a significant positive effect on firm performance. The findings provide insights into social and professional networks among AC members in Saudi Arabia. The most common ties among members are found to be professional and Wasta ties in the first place, then regionalism. Family ties follow this, and the last place is tribalism. Moreover, the findings uncovered that these social and professional ties are exclusive among AC members and extend to members of the company's board of directors and major investors. The analyses revealed that professional ties among members make them perform their duties professionally. In contrast, family relations and tribe relations negatively impact ACA, mainly because of social compliments among them. The regionalism among members is noticeable; most participants prefer sharing the same region among members. Furthermore, the critical reasons behind using social and professional ties among members were found to be trust and loyalty, merit: expertise, qualifications and experience, Legal loopholes, lack of databases for choosing a new member recruitment procedure, increased job satisfaction, financial benefits, pressure from society on members/chairs and control over the committee. Also, Family, Region, Tribe, and Wasta have a significant negative indirect effect on Firm Performance through (ACA). In contrast, professional ties significantly positively and indirectly affected Firm Performance through ACA. This study addresses the gaps in the literature concerning Social and professional ties within AC and, Their effect on ACA and then firm performance. To the researcher’s knowledge, this is the first project that brings the issue of socio-cultural relationships to corporate governance studies and explores the implications of such ties on ACA.34 0Item Restricted The Implementation and the Impact of Audit Committees within the Framework of Corporate Governance in Saudi Arabia(Saudi Digital Library, 2023-10-11) Bin Salman, Abdulrahman Khalid; Burton, Bruce; Lambert, VickyThe key objective of this work is to investigate different stakeholders’ perceptions of the practices of audit committees in the field of corporate governance in Saudi Arabia. This research focuses on the role of audit committees, which are important governance mechanisms implemented by companies. In addition, consideration is given to how audit committees work in practice, and whether any barriers exist in relation to these committees fulfilling their duties. Additionally, this work investigates perceptions of the audit committees, current practices and the effects that social, cultural and economic factors have on the current situation surrounding audit committees in Saudi listed companies. By doing this, the researcher aims to examine how improvements in audit committee standards can address the underlying issues. This thesis draws on institutional theory to answer the following research questions: (i) How have recent changes in the Saudi corporate governance code impacted audit committees in Saudi Arabia?, (ii) To what extent have these changes enhanced corporate governance in Saudi Arabia?, (iii) To what extent are Saudi audit committees capable of supporting Saudi Vision 2030?, (iv) What are the areas for development in audit committee rules and practices in Saudi Arabia?. In order to address the aims and questions of this research, a multi-method qualitative approach was employed. This involved the use of a questionnaire that was completed and returned by 170 participants. Semi-structured interviews were also held with 32 participants to enrich the findings of the questionnaire. The participants in the study consisted of various members of board and audit committee members from listed companies in Saudi Arabia, as well as academic researchers, members of regulatory bodies and both internal and external auditors of listed companies. The findings suggest that the audit committees in Saudi listed companies have been positively influenced by coercive pressures. Moreover, the findings also imply that social, cultural and economic factors have an impact on audit committee procedures and that directors' boards are dominated by prominent shareholders. However, this can pose significant challenges for audit committees. Several policy recommendations for improving audit committee applications in Saudi listed companies are made in this research to help the Saudi economy grow in line with Saudi Vision 2030.85 0