Islamic values, ownership structure, corporate governance and disclosure in Saudi Arabian publicly listed corporations

Al-Bassam, Waleed, Elghuweel, Mohamed, Ntim, Collins G. and Soobaroyen, Teerooven (2012) Islamic values, ownership structure, corporate governance and disclosure in Saudi Arabian publicly listed corporations Southampton, GB. University of Southampton

Abstract

We investigate whether and to what extent publicly listed Saudi corporations voluntarily comply with and disclose recommended good corporate governance (CG) practices, and distinctively, examine whether the observed cross-sectional differences in such voluntary CG disclosures can be explained by corporate commitment to voluntarily embrace and incorporate Islamic values into business operations, as well as by traditional ownership structure and CG mechanisms. We find that corporations that depict greater commitment towards incorporating Islamic values into their operations through high Islamic values disclosure index score engage in higher CG disclosures than those that are not. Additionally, our results suggest that corporations with larger boards, a big-four auditor, higher government ownership, a CG committee and higher institutional ownership, disclose considerably more than those that are not. By contrast, we find that an increase in block ownership significantly reduces voluntary CG disclosure. Our results are generally robust to a number of econometric models that control for different types of disclosure indices, general firm-specific characteristics, and firm-level fixed-effects.

Keywords: Islamic values; Ownership structure; Corporate governance; Disclosure; Saudi Arabia

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Contributors

Author: Collins G. Ntim

Author: Teerooven Soobaroyen

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