Impact of Corporate Management on Saudi Arabia (Essay Sample)

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The Impact of Corporate Management on Saudi Arabia Stock Market Performance
Chapter 1- Introduction
Introductory Paragraph
The Saudi Arabia stock market is emerging and developing at a commendable job due to the initiatives put in place by various stakeholders who are working to ensure that the market becomes functional and competitive enough to reach the international standards. The paper is aiming at looking at the impact that corporate management has on the performance of this emerging stock market to assess how effective the impact is for the future of the market in question.
1.2 Statement of the problem
There are numerous aspects that can be said to be affecting the performance of this stock market owing to the fact that there are indeed numerous factors like government policy, development of industrialization aspects, and globalization among many others that can be said to be shaping the performance and other dynamics of this stock market. Corporate governance is an aspect that cannot escape unmentioned since it sets the mechanisms under, which organizations are controlled and managed by those in charge of running their affairs. These are the people who are responsible for setting the polices under, which these organizations operate and as a result, have an influence when it comes to stock exchange decisions and activities.
1.3 Significance of the study
The paper shall be looking at the role that corporate governance plays in the activities of the stock market. In this context, the emphasis shall be laid on the impact that corporate governance has had on the Saudi Arabia Stock market that is known to be emerging and expanding steadily. The analysis shall be based on the notion that corporate governance is concerned on addressing the concerns of the investors thus the need to create an environment where the stock market is well functioning to ensure that they get the best out of it. The paper shall assess the impact keenly to pave way for discussions and conclusion that shall appreciate the role of corporate governance in the Saudi Arabian case.
1.4 Research questions, aim, and objectives
1.4.1 Research Questions
This paper shall be aiming at answering the relevant questions that have been formulated to ensure that the expected results are obtained after the actual research activity is carried out by the researcher.
What is the relationship between corporate governance and stock market performance?
To what extent can the corporate managers influence the activities of the stock market?
How has corporate governance affected the growth of Saudi Arabia stock market?
What is the link between corporate governance of the corporations operating in Saudi Arabia and the recent improved performance in the stock market?
What other relevant activities are the corporate managers doing to sustain the observed performance in the stock market of Saudi Arabia?
1.4.2 Aim of the research
The research shall be tasked with the responsibility of analyzing the manner in which the stock market of Saudi Arabia has been performing in the recent past with a view of citing and singling out the impact that the corporate governance of the leading and upcoming firms has had on the improved performance. It shall be analyzing the specific activities that are being played by these managers and their support teams when it comes to stock market activities. It is evident that corporate participate in the stock market activities, in the form of either selling or purchasing securities that may be inform of shares to enhance their investments in other companies or sell their securities to raise the required capital that can enable them to fund their activities. The paper shall be looking at how the activities and decisions made under corporate governance influence the performance of the stock market in the Saudi Arabian Case. 1.4.3 Objectives of the study The study aims at looking at the performance of the Saudi Arabian stock market with a view of analyzing the reasons behind its massive improvements in terms of performance in the recent years. It is evident that this stock market has been on the rise where there have been various activities taking place due to an increase in the number of participants. The paper shall concentrate on the role played by corporate governance of numerous companies in enhancing the observed improvement in the performance of this stock market where emphasis shall be laid on the decision making criteria of the management when it comes to issuance of securities, timing, pricing mechanisms, and other related factors to understand the impact that the corporative governance has on the performance of this stock market that is recording positive performance. 2.0 Literature review Saudi Arabia is a country whose stock market is picking up and developing at an impressive rate for the last couple of years (Ramage 17; Sarstedt 85; Tsamenyi 36; Zulkifli 52) . Corporate governance of numerous firms operating in this country and the entire region can be said to have led to the success that is being witnessed. Stock market is used as a tool that enhances decision making and can be said to control and determine corporation’s behavior (Hawley et al 64; Cordesman 54; Fernando 85; Ramady 106; Sekaran 63).
It is evident that the economic conditions of the country are much dependent on the performance of the stock market since the majority of the companies and investors interact over there in form of selling and purchasing shares among other securities. Corporate governance has become instrumental in enhancing the growth of these markets in various economies thus helping the governments to advance in various forms. Cordesman (54) argues that it is evident that a market that portrays characteristics of prudent corporate governance tends to attract more investments and increased levels of transactions thus increasing market liquidity and capitalization, which eventually leads to the development of the stock markets (Amenc and Sourd 72; Aronson 124; Bryman 66) .
Corporate governance is ensuring that the funds of the investors are secure by coming up with numerous control mechanisms where they use the power of the stock market (Duffhues 76; Graham and Al Emid 34; Hunt-Ahmed 109; Macey 91; Rocha et al 79; Solomon 62; Zattoni 88). It is based on safeguarding the interests of the investors by ensuring that the values of their shares remains fairly constant over time to have the stability that helps to restore the faith of the investors. The Saudi Arabian corporate are increasing the accessibility of the stock markets by ensuring that they trade their shares on it to allow the investors to acquire them (Al-Turki 76; Arouri et al 53; Flickinger 90; John and Anil 69; Shoult 51).
The corporate managers normally sit at the fulcrum of the decision making organs of their respective companies where they are expected to make decisions regarding the directions to be taken by the companies (Klonowski 213; The Report: Emerging Saudi Arabia 2007 87). In this regard, there is always need to have enough finances to ensure continuity of numerous operations whose financial requirements differ in both value and urgency thereby forcing the management to devise mechanisms of ensuring that the firms have enough money to facilitate the same. The desire to have enough finances also drives the need to have a secured future for the firm where the management and other stakeholders normally feel the need to have investments that shall ensure that the firm remains in pole position of having a bright future (Bryman and Emma 63; Choi and Sandra 95). The two needs, which are need to have adequate finances and need to have a secured future has been driving the Saudi Arabian firms to get involved in stock markets where they aim to issue and sell their shares and other securities as well as invest in securities from the firms that they believe can help them to move to the required level.
The shareholders and owners of these firms have entrusted the stewardship roles to the corporate managers who have to exercise their powers to ensure that the firm in a position to achieve the set objectives. Such decisions and activities normally impact positively on the stock market since there are numerous transactions and participants taking part in the growth of the market (Cordesman 68). The Saudi Arabian stock market has seen an increase in the number of those companies that need to sell and buy shares and other securities thus helping it to expand and grow to the level that is been witnessed today. Corporate governance has always been encouraging the expansion and regulation of the market to help the companies to grow and expand rapidly in the economy thus helping market itself to become efficient and sufficient. 3.0 Methodology 3.1Study design The study is going to concentrate on obtaining the relevant and up to date sources of information that are going to be essential in ensuring that the research questions are well tackled. As stated in the aims of the study section above, the research paper is going to concentrate on answering questions that have been outlined in the research questions section where emphasis shall be laid on utilizing the available sources of information to ensure that the questions are tackled thoroughly to enhance the proper articulation of the objectives of the study. There are various sources of information that the study is going to borrow its ideas from to ensure that the information obtained is based on a strong ground to facilitate their authenticity and hence originalit...