?TO WHAT EXTENT DOES CORPORATE GOVERNANCE AFFECT FINANCIAL REPORTS IN SAUDI JOINT-STOCK COMPANIES TO AVOID BANKRUPTCY

Abstract

Corporate governance on financial reporting for Saudi Joint-stock companies is pegged on the concepts of transparency and fairness in the relationship between the firms and its shareholders, as well as the idea of eliminating conflict of interests. Various definitions have been provided to describe what corporate governance is. Despite the different definitions of the concept of corporate governance, the primary goal that it seeks to achieve is to protect the rights of shareholders, the environment of the investment and business in the market, by creating an environment of transparency and credibility between corporate managers and shareholders. Corporate governance has been considered as a laudable approach in enhancing the integrity of financial reporting to reduce bankruptcy and imminent losses arising from investments influenced by non-credible financial reports. Corporate governance is an instrumental aspect for joint-stock companies as it aids in the protection of the interests of the investors. This study aims to concentrate on the joint-stock companies registered in the Saudi Capital Market Authority. This study also aims to analyse the principles of disclosure and transparency and how they aid the revelation of corporate information within the confines of governance. The focus on the joint-stock companies registered in the Saudi Capital Market Authority is triggered by the importance attributed to the shareholding arrangements and their contribution to the overall economic development in the country. A substantial number of the companies operating in the stock exchange market fall under this category, also the presence of many investors -local and international- from different groups who wish to invest in these companies also push towards finding effective legal ways to protect them and thus protect the investment environment in general. Notably, corporate governance is instrumental in the realization of such an objective of credible financial reporting, which is critical in the capital markets