Introduction
GCC countries are characterized by evident similarities in their cultural specifics, such as language, religion, and the general worldview, their economy, including the ownership and capital structures deployed, politics, and geography. Therefore, the decisions that the Gulf Cooperation Council makes are linked directly to the organization’s corporate governance system. When selecting candidates for the position of an independent director, the Council is guided by phenomena such as nepotism, favoritism, and tribalism (Falgi, 2009).
Corporate Governance Practices in Saudi Arabia
Corporate governance practices in Saudi Arabia are also worth exploring due to the unique environment of the corporate ownership in which they develop. The concept of ownership in the GCC environment is linked directly to family ties and the idea of a regulated market (Alghamdi, 2012; Attar, 2014). As a result, opportunities for exerting influence on managers and supervising their actions are opened. The following shift in the relationships between managers and stakeholders helps to prevent conflicts between them. It is believed that the higher the ownership concentration levels within a state, the fewer the agency problems are (Clark, 2004).
Conclusion
It is also typical for GCC states to use debt financing as opposed to the approach based on accumulating equity capital (Al-Hadi et al., 2017). GCC states owe their current debt rates to bank financing (Yahyaee, 2006; Chowdhury & Maung, 2013). Even though leveraging can be observed in GCC companies, the board of directors with their profound knowledge of financing has a tremendous role in managing financial processes. Furthermore, the religious factors defining the source of capital as Islamic or non-Islamic need to be taken into account. At present, 75% of Saudi organizations use the services of Islamic banks (Al-Ajmi et al., 2009).