The impact of applying the rules of corporate governance on the firm performance of the Saudi stock market: An empirical analysis of Saudi listed companies

Abstract

Abstract Background Corporate governance has become a critical issue on both a local and international level. accordingly, Saudi authorities have taken urgent action to investigate any financial corruptions which have emerged in the Saudi stock markets in keeping with principles of Saudi version 2030. Due to discovering that financial corruption in the telecommunications (telecom) companies, therefore the aim of this study to investigate the impact of the governance of companies listed on the Saudi stock market (SM) by analysing the content of financial statements and Annual report published of the companies from 2015 to 2018 (existing data). Methods This study employed secondary information resources (existing data), which relate to the stock market official website and the company’s website. Furthermore, the sample of the study consisted of 65 companies listed in the Saudi Arabia stock market by analyzing the content of financial statements published in the companies from 2015 to 2018 (existing data). The adopted three databases in this study are the Saudi Stock Exchange or Tadawul; Argaam database; and The Bloomberg Terminal database. The findings This study showed that both hypotheses are partially accepted because the association has found between Finding between return on Assets ROA and company age and posts of chairman and chief executive officer CEO and foreign ownership, as well as return on equity ROE and foreign ownerships, company size; and company age. In conclusion, this study opens the door for the further researcher to undertake primary research whether quantitative, qualitative or mixed methods designs Conclusion Despite the fact that the study concluded that several companies in Saudi Arabia implement and comply with the rules of CG, however, these companies need to invite high professional experts to improve the performance of the companies in terms of making companies to meet the CG required and attract the investors.