| Summary: | The term 'corporate governance' generally refers to the sets of mechanisms aimed at ensuring that a firm, as a productive organization, is managed effectively in pursuit of its objectives; its meaning has evolved over time often in response to corporate failures or systems crises which have occurred internationally. Each crisis or major corporate failure has, however, been attributable to incompetence, fraud and abuse and consequently met by new strategies and tighter measures of governance. In this process of continuing change, developed countries, in particular have established a variety of laws, regulations, institutions and enforcement tools. The objectives of these varied defensive methods are to align the interests of companies with greater justice, accountability and transparency. Developing countries, including Saudi Arabia, in comparison, have made far less effort to improve corporate governance practices. The reasons have been generally associated with weak legal and regulatory systems, poor banking practices, ineffective oversight by corporate boards of directors and the apparent negligence of minority shareholders. Moreover, the proven neglect by political leaders of corporate governance as a system of proper measures and private companies' unawareness of the importance of good governance for their profitability have further aggravated the situation. It is exactly in this context that the present study aims to (i) explore the Saudi approach to corporate governance, comparing it with those approaches found in the US and the UK; (ii) evaluate the efforts made by the Saudi legal authorities to reform the regulation of publicly held companies in Saudi Arabia; and (iii) provide solutions and make recommendations believed to reform the Saudi system so that countries in the Gulf region as well as other countries in similar situations, can benefit from the Saudi experience. The importance of this study stems from the fact that it represents the first attempt to explore the Saudi system of corporate governance from a legal perspective, using comparative and analytical approaches; in academic terms this has not been done before.
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