Corporate Governance Project
The Saudi Market is in the midst of transformational economic change. The newly announced Saudi 2030 Vision for a diversified economy with less dependence on oil reflects this transformation. Foreign institutional investors were recently allowed to invest directly in the Saudi stock market. As well, in its effort to attract investment, diversify its economy, and create sustainable economic growth and jobs. The government has embarked on a new initiative that allows fully owned foreign retail and wholesale companies to invest directly in the Saudi market without the traditional Saudi partnership requirements. The aim of the government is to transform the Saudi economy to one of the region’s most diversified knowledge based economic centers and to improve the performance of different sectors of the Saudi economy, including state-owned enterprises and family businesses as they transition between generations.
As part of the effort to transform the Saudi economy, corporate governance is identified as an important factor in providing a vehicle to assure sustainability and security for investors and for corporate social responsibility. Quality corporate governance is viewed as a key factor for attracting domestic and foreign investors, spurs sustainable economic growth, and provides employment opportunities.
Good governance is the key for companies in the increasing globally competitive market; particularly, when family-run businesses are in the transition to be integrated into global market. Good governance provides assurance for long-term profitability and sustainability. It gives positive signal to outside investors. Therefore, we believe it is absolutely essential to promote a good Corporate Governance benefiting from COB academic assets and experiences.
Hence, College of Business (CoB) at Alfaisal University partnered with Saudi Arabia General Investment Authority (SAGIA) on a project aimed at increasing the society awareness of corporate governance and its value for the economy. The partnership started with a project to calculate the Corporate Governance Index (CGI) for the companies trading on the Saudi stock market. The index is calculated based on the governance principles published by the Saudi Capital Market Authority (CMA) and The Organisation for Economic Co-operation and Development (OECD). It shows how each company implement these principles. The main objective of the CGI is to promote good corporate governance culture in the Saudi market through tracking and monitoring corporate governance practices, and identifying governance challenges, and problems.