Corporate governenance Essay Example | Topics and Well Written Essays - 1500 words

Corporate governenance - Essay Example lowed by series of consequences in the capital markets including managerial, and accounting corruption or weakness of the internal control systems panel on activities of the financial institutions. Based on the above the global economy has witnessed the introduction of new terminology namely Corporate Governance to detect the weakness in the companies’ control. The concept of the Corporate Governance has been developed to direct the management and business inside and outside the company. The Corporate Governance function enables the company to ensure the existence of efficient systems, sets out responsibilities and duties of the board of directors’ members and the executive management of the company, considering that interest of the shareholders irrespective of their shareholding and the interests of the different stakeholders in the company should be protected (Menon and Joanne1997, p 564). The responsibility of the Corporate Governance is maintaining interest such genuine management of resources and engaging in environmental awareness of the shareholders and achieve fairness among them, strengthening the role of disclosure and transparency, and reiterate role of the management. The laws and regulatory policies of the business in the Kingdom of Saudi Arabia have not given considerable attention to the concept of the Corporate Governance, except after the crisis of the Saudi Stock Exchange which took place in the second half of the year 2006 particularly 1/7/2006. In light of the flourished Saudi economy due to oil price soaring and availability of the cash along with the loans borrowing from the banks, individuals began to speculate in shares through availing loans from the banks and not from their own savings. Lack of transparencies in the market, misleading rumors, weakness of control from the Capital Market Authority and management of company’s speculations on the poor companies in terms of the financial position have increased (Ian and William 2005,