Effectiveness of the board of directors in monitoring executive management: Preliminary evidence from Saudi Arabia

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Abstract

Elements of corporate governance must be activated at all scales for the efficient functioning of a nation’s capital market. The effectiveness of the board of directors depends on factors related to, for example, the composition of the board and its independence. This study aims to investigate empirically whether the board of directors is an effective mechanism for monitoring managers in Saudi Arabia through a survey. A questionnaire that was developed and employed by Elyas (2015) is utilized for data collection after modifying it and judging its appropriateness. We targeted individuals who had relevant experience as members of the board of directors as our respondents. Only 29 subjects took the survey. The results indicate that the respondents generally disagree with the survey items, pointing out the ineffectiveness of the board of directors in monitoring executive management. Although the subjects’ credible experience can be assumed, the generalizability of our research findings is limited because of the low number of respondents.

Keywords: Board of Directors, Executive Management, Monitoring, CEO, Effectiveness

Authors’ individual contribution: Conceptualization – K.R.A; Methodology K.R.A and I.Y.A; Validation – K.R.A and I.Y.A; Formal Analysis – K.R.A; Investigation – K.R.A; Writing – Original Draft – K.R.A and I.Y.A; Writing – Review & Editing – K.R.A.

Acknowledgment: We thank Dr. Ahmed Al-Hadi Karimuddin, King Saud University; Prof. Murya Habbash, King Khaldi University; Dr. Abdulaziz M. Alwathnani, Alfaisal University; Dr. Mohammed Albader, the Institute of Public Administration and AlAnoud AlShaikh, adjunct lecturer, Al Immam University for reviewing the research instrument and supplying us with comments that assist us in developing it. We also thank the anonymous reviewers and the editorial board for their comments. All remaining errors are our own.

JEL Classification: K22, L21, L51, M1, M48, M52, M120, M140, M410

Received: 15.05.2019
Accepted: 13.09.2019
Published online: 16.09.2019

How to cite this paper: Al-Adeem, K., & Al Sogair, I. Y. (2019). Effectiveness of the board of directors in monitoring executive management: Preliminary evidence from Saudi Arabia. Journal of Governance & Regulation, 8(3), 72-82.
https://doi.org/10.22495/jgr_v8_i3_p7