Corporate Governance, Disclosure Quality and Financial Performance: A Comparative Study of Corporate Firms in Saudi Arabia and Australia

Abstract

Corporate governance became one of the most important topics of this century in the business world, particularly after the collapse of large companies such as Enron in the United States, Barings Bank in the United Kingdom and HIH Insurance Ltd in Australia, as well as a number of other high-profile corporate scandals. Good corporate governance practices offer shareholders and stackholders greater confidence and protection. They play an important role in ensuring the accountability of companies by providing transparency, reducing conflicts of interest and attracting investments. The main purpose of this study was to examine the relationship between corporate governance mechanisms and both disclosure quality and financial performance in Saudi Arabian and Australian listed companies. Saudi Arabia is an emerging market and one of the biggest and most important markets in the Middle East, while Australia is a developed market with strong and advanced legal protection and investors' rights. Neither market was directly affected by the global financial crisis; thus, they provide good comparative cases to gain insights into the operations of corporations and how best to manage these operations to achieve economic development - especially in emerging markets.