Corporate Governance Reform in Saudi Arabia: A Modelling Approach

This thesis argues for building a robust framework of good corporate governance in Saudi Arabia as a key policy option to realize the country’s Vision 2030 goal to transform the national economy from chronic dependence on (decreasing) oil revenues to a diversified resources economy. The thesis adopts a modelling approach to examine experiences and challenges of corporate governance reform nationally and internationally to enlighten and enrich the Saudi reform agenda. After brief introductory background about the country and the research problem and methodology (Chapter 1), the thesis discusses (in Chapter 2) the definition, elements, efficiency and theoretical framework of corporate governance as a foundation for the analysis in subsequent chapters. A generic three-layer taxonomic model of core values, supra-national and national standards of corporate governance is proposed (in Chapter 2) and used as a framework for subsequent discussion and analysis. Corporate governance reform has generally been slow in Saudi Arabia. The prevailing Saudi institutional and statutory frameworks of corporate governance and their past and recent reforms are discussed in Chapters (3) and (4). The thesis argues strongly for aligning the Saudi regulatory framework of corporate governance with contemporary international principles and international best practices and model of corporate governance. Accordingly, and considering in particular that the Saudi legal system is fundamentally based on supra-national Islamic Shari’a law, a comparative analysis is conducted in Chapters (5) and (6) to establish compatibility or otherwise between the model of Shari’a principles and modern OECD corporate governance principles. Moreover, Chapter 7 discusses models of national application of corporate governance standards in various jurisdictions to draw lesson for Saudi corporate governance reform. Finally the thesis ends with conclusions and recommendations in Chapter 8 to strengthen both the institutional and statutory components of the Saudi system of corporate governance.