Studies and Research
​​​​This page provides research and studies on issues relevant to the capital market activities to support policy decision making and enrich financial literacy of the public. The analyses and opinions in those research and studies express the authors' views and do not necessarily reflect CMA's opinion.

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    Studies and researches

    The Document for the Strategic Directions to Develop Sukuk and Debt Capital Market

    Apr 2024

    This document highlights the work of the Sukuk and Debt Instruments Development Committee in determining strategic directions for developing the Sukuk and debt instruments market to contribute to the achievement of the Financial Sector Development Program’s objectives, which is to establish an advanced financial market, particularly in relation to debt instruments. The strategic Directions have been determined based on various criteria, including the evaluation of regulatory and infrastructure gaps, benchmarking and best global practices, as well as gathering insights from market participants.

    The Document for the Strategic Directions to Develop Sukuk and Debt Capital Market
     

    Strategic Directions to Raise The Attractiveness of The Asset Management Industry in The Kingdom​

    March 2024

    As part of the role of the CMA in supporting and developing the capital market and its institutions, this document sheds light on the current state and the historical performance of the asset management industry, the opportunities and areas of development of the industry through the review of the current regulations and the mechanisms available to investment funds, taking into account the most prominent international practices.  The document also outlines the strategic ​directions of the CMA to support the growth of the asset management industry.

    Strategic Directions to Raise The Attractiveness of The Asset Management Industry in The Kingdom​
     

    ESG and Financial Sustainability: The Role of Saudi Corporate Governance Reforms

    May 2023

    ​There is rising interest among investors and regulators in companies' Environment, Social, and Governance (ESG) practices. Despite this, the various implications of ESG remain vague. To this end, this paper examines the relationship between corporate ESG and financial sustainability and


    how corporate governance reforms and pandemics can influence this relationship. Using a dataset ​​​​​​​comprising public companies on the Saudi Stock Exchange (
    Tadawul) between 2013 and 2021, we found that corporate ESG disclosure and financial sustainability are positively related. Moreover, the corporate governance reform of 2017 positively moderated this relationship, while the Covid-19 pandemic negatively moderated it. The results of this study contribute to the corporate governance and sustainability literature by providing new evidence that corporate ESG may improve financial sustainability and that this relationship is sensitive to corporate governance regulations and market conditions. These results have practical implications and may inform investors' and regulators' decisions.


    ESG and Financial Sustainability: The Role of Saudi Corporate Governance Reforms
     

    The Impact of The Development of Corporate Governance Regulations and Policies on Investors’ Confidence in Companies Listed on the Saudi Arabian Stock Exchange (TADAWUL)

    Octo 2022

    This study aims to examine the relationship between the development of Corporate Governance (CG) regulations and policies, and investors' confidence in non-financial firms listed on the Saudi Arabia Stock Exchange (Tadawul) in the period from 2006 to 2020.

    The Impact of The Development of Corporate Governance Regulations and Policies on Investors’ Confidence in Companies Listed on the Saudi Arabian Stock Exchange (TADAWUL)
     

    The Impact of Social Performance on Financial Performance of Listed Companies in Saudi Arabia

    Jul 2021

    The relation between corporate social performance (CSP) and corporate financial performance (CFP) has been extensively researched. In this paper, we extend this research into the Saudi market by examining all publicly listed companies. Our findings reveal that there is no significant relation between CSP and the financial performance of Saudi listed companies. However, looking at the different aspects of corporate social responsibility (CSR), we document that the environmental CSR and the stakeholder CSR have a positive and significant effect on the financial performance metric of return on invested capital.

    Keywords: Corporate social performance; corporate financial performance; corporate social responsibility.

    The Impact of Social Performance on Financial Performance of Listed Companies in Saudi Arabia
     

    The impact of ownership structure on firms performance

    April 2021

    In this study, we develop a new method of ownership classification and examine the impact of various owners on firm performance. Prior research focuses mainly on managerial ownership and/or a few general classifications (block-holders vs. non-block-holders, institutional vs. non-institutional). No prior studies attempt to model all corporate owners together in one model. This study fills this gap. Our classification divides listed corporations into government, institutional, public, managerial, family, and foreign owners. Analyzing and comparing these companies yields several important findings. First, government and institutional firms perform the best, while public and managerial firms perform the worst. Second, the OLS and simultaneous system 2SLS estimates suggest that government and institutional ownership contribute positively to firm performance, while public ownership has a negative effect. Incorporating the potential endogeneity issue into the system suggests that the relationship is bidirectional, where the causality runs from ownership to performance and vice versa.

    The impact of ownership structure on firms performance
     

    ​​​​​​​​​Has the issuance of the loss-​making companies' procedures contributed to improving the financial performance of these companies?

    Sep 2020

    In mid-2014, the Saudi Capital Market Authority has introduced new procedures and instructions related to listed companies with accumulated loss of their share capital. The present study questions whether the enforcement of these procedures has improved the financial performance of targeted firms using Difference-in-Difference models. The results show a positive and significant impact of the introduction of these procedures on financial performance of loss-making firms. The average improvement of the return on assets, which is contributed by the procedures, is estimated to be 8.4%. The results are robust given the results of the Placebo test where a false shock is presumed in addition to the results of sub-samples. The study also finds a positive spillover-effect on other loss-making firms. The study, further, applies Difference-in-Difference-in-Difference models to identify the channels where the improvement of financial performance has emerged. The results show that the increases in assets` efficiencies and profitability are the channels of the improvement.

    ​​​​​​​​​Has the issuance of the loss-​making companies' procedures contributed to improving the financial performance of these companies?
     

    Survey of specialists' opinions on the mandatory detailed disclosure of the remuneration and compensation of senior executives

    Mar 2021

    A number of listed companies submitted a proposal to the Capital Market Authority regarding the continuing disclosure in aggregate of the remuneration and compensation of senior executives in the Board report of the listed companies on the Saudi Stock Exchange. This proposal is based on Subparagraph (B-4) of the paragraph (A) of the article 93 of the Corporate Governance Regulation. Which stipulates "A) The Board shall: … 4) a description of the necessary details with respect to the remunerations and compensations granted to each of the following, separately: ... B. Five Senior Executives who have received the highest remuneration from the Company, provided that the chief executive officer and chief financial officer are among them", The disclosures in the Board report of the remunerations granted to the Board members and Senior Executive should be based on Appendix (1) Remuneration Schedule in the Corporate Governance Regulation. Consequently, the Authority has studied the matter and took the opinions of a group of people working in the financial market sector.

    Survey of specialists' opinions on the mandatory detailed disclosure of the remuneration and compensation of senior executives
     
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