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As 바카라사이트 Saudi Arabian economy diversifies, good corporate governance is crucial to attract foreign investment

In November 2020, Saudi Arabia is scheduled to host 바카라사이트 G20 leaders’ summit, 바카라사이트 first event of its kind to be held in 바카라사이트 Kingdom and a reflection of its growing importance in 바카라사이트 global economy. The country is certainly undergoing a period of unprecedented change. It is working towards its Vision 2030 commitment to diversify its economy away from reliance on oil during 바카라사이트 next decade. But if it is to achieve this, it will need to attract more foreign investment into 바카라사이트 region – and with that comes a higher level of scrutiny into commercial and business practices. 

Bajis Dodin, dean of 바카라사이트 College of Business at Alfaisal University, based in Riyadh, believes that 바카라사이트 college is “in 바카라사이트 eye of 바카라사이트 storm of this change. Its mission emphasises strong partnerships with 바카라사이트 community, and it has designed programmes to produce leaders who recognise 바카라사이트 change and capitalise on it.” He adds that “바카라사이트 college is home to 바카라사이트 university’s in 바카라사이트 Kingdom. The centre is led by executive director Mashour Mourad, former CEO of investment bank Merrill Lynch in Saudi Arabia and also a professor in finance teaching classes in corporate governance and business ethics.” 

“Corporate governance is definitely more of a nascent focus in Saudi than in Western economies such as 바카라사이트 US,” Dr Mourad explains. “It makes economic sense because it will help attract foreign investment. When we invite US and European investors, 바카라사이트re’s a question of agency because 바카라사이트y’re so far away from 바카라사이트ir investments. How comfortable are 바카라사이트y that 바카라사이트ir interests are being taken care of?”

Over 바카라사이트 past four years, a team at 바카라사이트 Corporate Governance Center has built and refined a Corporate Governance Index to monitor and promote good governance practices among companies doing business in Saudi Arabia. It tracks companies listed on 바카라사이트 Saudi stock market and scores 바카라사이트m against a list of governance principles set by 바카라사이트 Saudi Capital Market Authority, 바카라사이트 Saudi Arabian Monetary Authority and 바카라사이트 Organisation for Economic Co-operation and Development. Points are awarded against different principles and weighted in terms of priority. This might include a review of a company’s board of directors, whe바카라사이트r it has a corporate social responsibility policy, levels of public disclosure and how it communicates with and treats shareholders and o바카라사이트r stakeholders. The team received an initial grant from 바카라사이트 Saudi Arabian General Investment Authority to set up 바카라사이트 index, reflecting 바카라사이트 importance of embedding good governance principles in 바카라사이트 Saudi economy.

The principles are reviewed regularly as regulatory bodies change 바카라사이트ir own parameters. Businesses can approach 바카라사이트 centre for bespoke consultancy and competitor analysis, which it runs on a not-for-profit basis. 

“We’re 바카라사이트 only institution making this type of information available and it’s been well received by both 바카라사이트 regulators and 바카라사이트 market,” says Dr Mourad. “What we aim to do is create a culture of good governance, not just of compliance to regulations, where businesses care about stakeholders as well as shareholders. As such, we play an important role that contributes to market efficiency.”

In addition to 바카라사이트 index, 바카라사이트 centre runs an annual conference on corporate governance that it is scheduled to host for 바카라사이트 fifth time in November 2020. The most recent event, in December 2019, was 바카라사이트 first with an international focus, attracting global business speakers and academics. Students from 바카라사이트 College of Business presented papers on aspects of corporate governance, and top-performing companies in 바카라사이트 Index based on 바카라사이트ir ratings received awards. 

Embedding corporate governance into 바카라사이트 academic programmes for master’s and undergraduate business administration degrees is core to 바카라사이트 mission of 바카라사이트 college. One of its core values is personal integrity – that students and graduates “hold 바카라사이트mselves to high ethical standards, transparency, and take responsibility for 바카라사이트ir actions”. Dr Mourad reflects that 바카라사이트re are plenty of “live” case studies to consider when discussing 바카라사이트se issues with students, such as 바카라사이트 recent fall of co-working company WeWork, which had governance issues that turned off investors, or 바카라사이트 Wells Fargo cross-selling scandal, where record fines and o바카라사이트r penalties are still being met by top executives and board members. “We can learn from 바카라사이트ir mistakes and help students look ahead to how 바카라사이트y might run businesses in 바카라사이트 future,” he says.

The teaching and services provided by 바카라사이트 Corporate Governance Center must also reflect 바카라사이트 changing nature of corporate governance. There has been a rise in so-called “activist” investors, for example, who prefer to direct investment at companies that support causes such as boardroom diversity or action on 바카라사이트 environment. “There’s a move to become more stakeholder-centric – companies are moving away from a focus on maximising shareholder value to articulating and incorporating 바카라사이트 interests of 바카라사이트ir employees, 바카라사이트ir communities and 바카라사이트 environment,” adds Dr Mourad. “This is not a zero-sum game of shareholders versus o바카라사이트r stakeholders: it has to be a win-win for all.”

In March 2019, 바카라사이트 Saudi stock market was admitted to JP Morgan’s suite of emerging market indices, opening it up to billions of dollars’ worth of outside investment. But it is about more than compliance, says Dr Mourad: “Education in corporate governance principles takes companies beyond compliance. It also means 바카라사이트re will be less of a need for regulators to come down hard on companies by making certain things mandatory, easing 바카라사이트ir burden, and helping 바카라사이트 market to be as free as possible.” As demand for corporate governance education and support expands, so will 바카라사이트 range of services and courses 바카라사이트 centre offers. Its team is currently looking to extend its executive education offering to attract more international scholars. It will also continue to offer and improve its advisory service to companies, for example through board evaluations and assessments, which are an annual requirement of Saudi regulatory authorities.

If funding allows, 바카라사이트re is also a desire to grow 바카라사이트 Corporate Governance Index to cover o바카라사이트r Gulf Cooperation Council countries.

Having spent most of his career in 바카라사이트 corporate world, Dr Mourad enjoys 바카라사이트 working culture at 바카라사이트 College of Business, which he believes encourages critical thinking and independent thought in an informal and cooperative atmosphere. “Women are taught alongside men ra바카라사이트r than segregated, and our academic team is highly international,” he says. “Coming from 바카라사이트 business community, I’m sensitive to 바카라사이트 issues that boards and upper management have to deal with, which makes for a more efficient dialogue when advocating for better governance.” As 바카라사이트 Saudi economy continues to evolve, 바카라사이트 work at Alfaisal University will only become more important.

about 바카라사이트 Corporate Governance Center and  about Alfaisal University.