OPENING THE SAUDI ARABIAN STOCK MARKET: ITS IMPACT ON INFORMATION DISCLOSURE

How to cite this paper: Alajmi, A. (2020). Opening the Saudi Arabian stock market: Its impact on information disclosure. Corporate Governance and Sustainability Review, 4(2), 102-126. https://doi.org/10.22495/cgsrv4i2p10 Copyright © 2020 The Author This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0). https://creativecommons.org/licens


INTRODUCTION
Financial liberalization became an essential economic policy in order to transform the economic structure of developing countries into a state where both the private sector and developed financial markets are the main drivers of economic growth since the 1980s (Ilhan, 2019; Bekaert, Harvey, & Lundblad, 2005). Stock market liberalization is a country's opportunity to provide foreign investors the opportunity to invest in domestic equity securities. It is a component of financial liberalization and a specific element of capital account liberalization as it eliminates restrictions on capital inflows and outflows (Ilhan, 2019;Henry, 2000). In the late 1980s, the global financial system, especially in emerging countries, witnessed extraordinary changes in the financial markets due to the opening of markets to external investors (Laopodis, 2004). Foreign investors considered emerging markets as an opportunity to invest by buying emerging market equity shares. Researchers like Bekaert and Harvey (1997), Claessens, Dasgupta, and Glen (1995), and Urrutia (1995) focused on the economic impact of emerging markets and return behaviour market integration. However, very few studies focused on the effect of liberalization on stock market performance (Laopodis, 2004).
The Saudi Arabian stock market faced different changes. One of these changes is the liberalization of the stock market which provided the opportunity for foreign investors to invest in the Saudi stock market. The foreign investors started to invest in the Saudi stock market in January 2009, and since then, the Saudi stock market has faced a sharp increase in foreign investment over the past three years.
The decision of liberalizing the Saudi stock market was made in August 2008, and this decision had an effect on the disclosure of information by Tadawul (www.tadawul.com.sa) which announced for the first time the number of investors in the Saudi Arabian stock market for the public.
Al-Tuwaijri, the Chairman of the Board of Directors of the Saudi Capital Market Authority mentioned the importance of allowing investors to access the Saudi stock market. He also mentioned the importance of annual reports being released in two languages -English and Arabic -to allow investors to invest more by analyzing the said reports (Al-Tuwaijri, 2010).
The The economy in Saudi Arabia is oil-dependent, and it shares this characteristic with neighboring countries. These countries are members of the Gulf Cooperation Council (GCC). The oil production in GCC countries is about 16% of the total worldwide production in 2002. Furthermore, the oil reserves in GCC represent about 47% of the world's oil and 17% of the world's natural gas (Hammoudeh & Li, 2008).
The decision of liberalizing the stock market was made by the country's government to enable foreign investors to directly invest in the stock market exchange (Bae & Goyal, 2010). The 2008 stock market liberalization affected the Saudi Arabian stock market in different ways, the most important of which is the level of information disclosure by Saudi companies.
Despite investors considering Saudi Arabia's stock market as a risky market to invest in due to high-frequency fluctuation caused by misleading market analysis and disclosure level, it remains one of the biggest stock markets (Bakhsh, 2008).
The Saudi Arabian stock market is similar to both developing and developed countries. The Saudi financial system is, in reality, similar to the financial system in developed countries. However, the lack of a financial database makes the Saudi financial system more similar to the financial system of developing countries. Despite the Saudi stock market being in its infancy (it started in the 1990s), it has developed so quickly over the past 20 years (Al- Razeen & Karbhari, 2004).
The main objective of this study is to evaluate the effect of liberalizing the Saudi Arabian stock market on the disclosure of information.
The rest of this paper is as follows. Section 2 contains the literature review. Section 3 explains the methodology used to analyze the companies' annual reports. It is followed by Section 4 that presents the results. Section 5 contains the conclusion.

Corporate governance
Corporate governance is the mechanism through which financial directors ensure the return of investments. It is an investment made to protect investors and managers with benefits (Jaimes-Valdez, Jacobo-Hernandez, & Ochoa-Jimenez, 2017). In general terms, corporate governance represents all processes that guarantee the proper administration of the company's assets and resources (Nitkin, 2012) and generally considers the structure, power, and decision-making process regarding collective activities (Von Tunzelmann, as cited in De Reuver and Bouwman, 2012). One definition of corporate governance is the following: corporate governance is defined as the regulation and supervision of corporations (Letza, Kirkbride, Sun, & Smallman, 2008). The orthodox view of corporate governance is to ensure a high return on investments and satisfy shareholders.
Moreover, corporate governance can be described as the context in which organizations are embedded -given that it has been described as an environment of trust, ethics, and morals, representing an effort of interest groups, including the government, business sector, and the general public (Jaimes-Valdez et al., 2017; Aras & Crowther, 2008).
In particular, corporate governance represents a set of customs, processes, policies, customs, institutions, and laws that affect how the corporation is managed and whose purpose it is to directly or indirectly influence the conduct of the organization in relation to its stakeholders The legal system also influences corporate governance. The legal system is an external factor that does four things: 1) lays the foundation and fortifies the responsibilities and rights of stakeholders and their interests; 2) regulates relationships between parties possessing stakes in the company; 3) mandates the disclosure of financial and non-financial information for potential and existing stakeholders, and 4) provides legal rules defining the purpose of the business and legally binding contracts, and sets guidelines relating to the firm's purpose and how to operate principles

Stock market liberalization in emerging countries
Saudi Arabia is just one of the many emerging markets worldwide (Young, Peng, Ahlstrom, Bruton, & Jiang, 2008). As stated by Hoskisson, Eden, Lau, and Wright (2000), "Emerging economies are low-income, rapid-growth countries using economic liberalization as their primary engine of growth" (p. 249).
The government decided to liberalize the Saudi Arabian stock market to enable foreign investors to directly participate in the stock market exchange (Bae & Goyal, 2010). Different researchers like Bekaert and Harvey (2000), Kim and Singal (2000), and Chari and Henry (2004) stated that stock prices would increase because emerging markets offer a higher return on investments than other countries. As a result, firms participating in liberalized countries would enjoy a stock price increase. However, this does not happen all the time (Bae & Goyal, 2010). According to Henry and Lorentzen (2003) and Stulz (2005), the main reason behind this is the informational disadvantage foreign investors face, as opposed to local investors. This disadvantage could lead to high-risk investments and low-equity flow. Thus, improving information efficiency could result in less-risk investments (

Impacts of opening a stock market
The opening of the Saudi stock market offers an excellent avenue for foreign-based investors. In doing so, companies are more motivated to attract investors to take risks in their companies. According to Al-Faryan (2020), the liberalization of the stock market has improved the corporate governance of Saudi companies. In doing so, companies implement governance practices that are similar to practices used in other OECD nations. This change has improved the levels of disclosure and transparency in companies and minimized instances of fraudulent activities. Furthermore, liberalization has increased the efficiency of the market and economic development, growth, and stability. Companies have advanced appropriate measures to reduce the risk of becoming bankrupt. Hanani and Fara Dharmastuti (2015) state that effective corporate governance ensures companies depend on small boards and audit committees. These mechanisms increase flexibility levels of companies to react to changes and monitor various processes to ensure better performance. Liberalization of the business market has also improved risk management practices. According to Gouiaa, Zéghal, and El Aoun (2020), companies have strengthened the features of their boards to boost their work efficiency and also guarantee better management of risks to benefit from all opportunities that arise. The opening of the stock market has also simplified the processes of making investment decisions. Kallandranis (2019) states that firms choose better dynamics on investment to fulfill business interests. Saudi market is an established area, and liberalization drives it to greater heights. Lastly, liberalization simplifies decision making regarding the best area of investment. Mbatha and Ngibe (2017) state that small business enterprises grow due to the improvement of financial reporting. Therefore, the liberalization of the stock market drives the goals of globalization.
The liberalization of the Saudi stock market also impacts prices and the disclosure of information. Generally, this move increases stock prices. Nonetheless, this effect depends on other aspects. The type of company affects stock prices. Large, established companies drive stock prices up courtesy of their high revenue margins. Small business enterprises contribute toward stock prices, although their impact is minimal. Large businesses record higher stock returns due to better corporate governance. Kakinuma (2019) states that the operating performance and value of a firm are a direct replica of the type of corporate governance. Similarly, the type of business venture which attracts investors also impacts the prices of the stock market. Liberalization has also improved the level of disclosure of information that includes business risks. Coulmont, Berthelot, and Talbot (2020) state that investors prefer businesses that disclose their risks honestly. Such disclosure simplifies the recognition and appreciation of such risks. Businesses strive to grow, and as such, they must appeal to investors to help them accomplish their goals. Sanusi (2018) says that transparency determines the degree of a company's competitiveness. The degree of disclosure in companies, however, depends on several factors. Examples include company size, type of company, shareholders, and competitors. El-Bannany (2015) states that voluntary disclosure increases the level of openness in firms as compared to regulatory disclosure that acts as a form of coercion. Therefore, disclosure leads to better performance of companies due to an increase in competition to win best and established investors. According to Gouiaa et al.
(2020), enterprise risk management is an outcome of the level of transparency in an organization. Therefore, improvement of the performance of the stock market and the number of foreign investors in Saudi Arabia requires a consistently high level of disclosure.

Disclosure of information
Corporate disclosure of information has caught the attention of researchers in both developed and developing countries. Information disclosure is done by firms in many ways, with annual reports being the most valuable (Aljifri & Hussainey, 2007).
Information disclosure can be classified as voluntary or mandatory As its name suggests, their companies have the right to choose whether to disclose certain information that falls under voluntary disclosure. On the other hand, companies are mandated by the government to disclose certain information. The stock market in Saudi Arabia is the oldest in GCC. It began in 1935. Despite that, the average number of operating companies in Saudi stock share is 72. GDP per capita is the lowest, but the average daily trading volume is the highest in the GCC. Previously, the stock markets in GCC were, in general, ignored by foreign investors due to foreign stock ownership restrictions, lack of transparency and corporate governance, lack of information and research (e.g., research conducted by Erb, Harvey, & Viskanta, 1996) was the first on the stock market in the Middle East), differences in accounting standards, and uncertainty of political and economic situations. However, the increased confluence of economic reforms, higher oil and gas prices, the high growth rate in GDP, and political and tax motivators increased the desire of foreign investors to invest in GCC (Bley & Chen, 2006). In some GCC countries, like the UAE, the legal and regulatory stock market was reformed to widen the investor's base and propel investors toward new industries (Kerr, 2004). Hammoudeh and Aleisa (2004) found several similarities between GCC countries taking into considerations that there are some variations in predictive power among GCC stock markets. Moreover, it was revealed that Saudi Arabia has a huge influence on the behavior of other GCC countries.

Overview of the Saudi Arabian stock market
In 2004, the largest stock market in the GCC was the Saudi Arabian stock market, which represented 56% of the total GCC market (see Figure 2), reaching a market capitalization of $237.1 billion (see Figure 1).
Beshr Bekheet of Bekheet Financial Advisors in Riyadh said, "Saudi Arabia will be the major financial centre because it is the biggest economy and the largest market" (Wallis, 2006).    Figure 3 shows the number of listed sectors in a pie chart. As seen in Figure 3, the banking sector represented 8% of the total companies listed in the Saudi stock market but as seen in Figure 4, it accounted for 12% of the total volume of the shares traded between July 2010 and July 2011.
Moreover, the number of telecommunication, petrochemical, and real estate companies does not reflect the volume of trade. Clearly, petrochemical companies were more attractive due to their high profits in 2010.

Overview of the investors in Saudi's stock market
After opening the Saudi stock market to foreign investors in 2009, the classification of investors changed. The investors in the Saudi stock market were divided into 5 categories: the Saudi investors, GCC investors, Arab residents, non-Arab residents, and foreign investors (see Table 1).

Disclosure of information and stock price
According to Gibbins, Richardson, and Waterhouse (1990), Lev (1992), financial disclosure is defined as any information, quantitative or qualitative, that is released to the public either through formal or informal channels. However, this might lead to certain conflicts in interests between managers and external parties, and the reason behind these conflicts is that each party is looking to maximise their interests ( The level of disclosure can be classified as voluntary or compulsory. As indicated by Botosan (1997), the link between the level of disclosure and the cost of equity is an area of interest in financial research. The link is an area of debate as some researchers do not consider there is a link between the level of disclosure and the cost of equity, because the level of disclosure is stated in annual reports (Diamond & Verrecchia, 1991). However, some researchers like Clarkson, Guedes, and Thompson (1996) believed that level of disclosure reflects capital costs. The greater the disclosure, the lower the risk. Botosan (1997) mentioned both can happen depending on the country, regulations of corporate governance, and investors' behavior.

Research strategy
The information was gathered through secondary data collection. Empirical studies and existing data collected by other parties were critically analysed to fulfill the research objective and come up with a conclusion.

Method of data collection and data analysis
The annual reports of the firms and organizations listed in the Saudi stock market were considered. The figures were obtained from the Saudi Stock Exchange (Tadawul), the only stock exchange in the Kingdom of Saudi Arabia, and the companies' official websites.
The researcher chose to use annual reports because they are publicly available. Moreover, they are readily comparable among firms.
The annual reports in 2007 (before the opening of the Saudi stock share) and 2009 (after the opening of the Saudi stock share) were analyzed to compare the changes in the level of information disclosure. The data were analysed through content analysis.
As its name suggests, the researcher analyzed the content of the companies' annual reports. The number of words relating to the codes was counted to justify the disclosure of information. For example, code 10 is about risk management procedures. Thus, all sentences and paragraphs containing the word risk or words relating to risk management must be counted one by one (see Table A.1 of Appendix A for more details) The same method was used for all codes that are explanatorycodes 1, 2, 3, 4, 5, 10, 11, 12, 13, 14, 15, 18, 21, 24, and 27. These codes are presented through figures per company.
However, counting the words for some codes is not necessary to justify disclosure. Only their presence or absence is. This reflects the sections marked with "yes" in Appendix B. These codes are also not shown in the figures.
For example, code 6 pertains to the name of the board of directors. Its presence or absence can already justify the disclosure of information.
In addition, some boards of directors have longer names than others, making word counts not appropriate in justifying disclosure.
In terms of other methods to be used for this study, there is no alternative to examining secondary data other than content analysis. However, other researchers may conduct interviews and questionnaires to collect primary data.

Sampling
There are 146 companies listed on the Saudi Stock Exchange. These companies are divided into 15: banks and financial services, petrochemical industries, cement, retail, energy and utilities, agriculture and food industries, telecommunication and information technology, insurance, multi-investment, industrial investment, building and construction, real estate and property development, transport, media and publishing, and hotel and tourism. Using stratified sampling, one company was selected from each sector. The organizations are listed in Table A

Information disclosure per firm
Information disclosure and liberalization are related. The liberalization of the stock market affects the disclosure of information, which involves opening the stock market to foreign investors, therefore attracting them to invest. On the other hand, opening the stock market might allow foreign companies to penetrate the said market or give them a chance in getting more data about local companies (Al-Razeen & Karbhari, 2004). However, Botosan (1997) mentioned that the outcome depends on the country, regulations of corporate governance, and investors' behavior.
As seen in Appendix B, there are differences between companies in terms of information disclosure. The level depends on company size, type, and shareholders. Despite the corporate governance codes launched by the CMA (see Table C.1 of Appendix C), Saudi Arabian companies seem to not comply with corporate governance codes.
In general, the information disclosure levels of Saudi companies increased between 2007 and 2009. For instance, Savola's and the National Shipping Company of Saudi Arabia's (NSCSA) information disclosure levels increased. Liberalization has also improved the level of disclosure of information that includes business risks. Coulmont, Berthelot, and Talbot (2020) state that investors prefer businesses that disclose their risks honestly. Such disclosure simplifies the recognition and appreciation of such risks. Businesses strive to grow, and as such, they must appeal to investors to help them accomplish their goals. Sanusi (2018) says that transparency determines the degree of a company's competitiveness. The degree of disclosure in companies, however, depends on several factors.
Examples include company size, type of company, shareholders, and competitors. El-Bannany (2015) states that voluntary disclosure increases the level of openness in firms as compared to regulatory disclosure that acts as a form of coercion. Therefore, disclosure leads to better performance of companies due to an increase in competition to win best and established investors.
According to Gouiaa et al. (2020), enterprise risk management is an outcome of the level of transparency in an organization. Therefore, improvement of the performance of the stock market and the number of foreign investors in Saudi Arabia requires a consistently high level of disclosure. Al Rajhi Bank is considered as the number one bank in Saudi Arabia, so it might have hesitated to disclose more information. Moreover, its reputation and disclosure level indicate that the bank is not interested in foreign investors. The non-existence of annual reports in English further proves this. The bank only disclosed information about its board because it is mandatorily required by the CMA. It also has minimum voluntary disclosure as the number tabled and pages are almost the same in 2007 and 2009 (codes 24 and 27). Based on Table B.2 of Appendix B, SABIC's disclosure level decreased. It focused most on codes 11 and 12 -preparation of financial reports and corporate social responsibility (CSR) respectively. Its annual reports were in Arabic and English.
SABIC is a semi-governmental company, which could explain its poor disclosure level (as seen in Figure 8), focus on CSR, and preparation of financial reports. Moreover, SABIC disclosed information about its board because it is mandatorily required by the CMA. There was a sharp decrease in its disclosure of loans (code 14) due to the loan decrease itself, and therefore its disclosure level for this code did not decrease. Based on Table B.3 of Appendix B, Saudi Cement Company's (SCC) disclosure level from 2007 to 2009 increased. The increase was specifically in preparations of annual reports and corporate social government, and the duties and responsibilities of the audit committee (code 18). Moreover, the page number of the annual report increased by 10%.
SCC's disclosure level increased to attract more investors. The disclosure of the board was done to attract investors (Al-Razeen & Karbhari, 2004). Based on Table B.4 of Appendix B, Jarir increased its disclosure in codes 4, 10, and 18. Jarir improved disclosure in terms of the duties and responsibilities of the audit committee, dividend policy, and risk management. It clearly wanted investors to know that it has high control and excellent risk management.
However, Jarir did not have English reports which meant that foreign investors were not targeted by the company. As shown in Table B.5 of Appendix B and Figure 11, Saudi Electricity's information disclosure in 2009 did not progress. Its annual report was concerned about CSR and the preparation of financial reports. This was due to the Saudi government mandatorily asking for disclosure of annual reports and CSR data.  Table B.6 of Appendix B, Savola improved its level of disclosure. As shown in Figure 12, there were significant developments in nearly all codes. This showed Savola's compliance with CMA rules and corporate governance codes. As seen in Table B.7 of Appendix B and Figure 13, STC maintained its disclosure level in terms of corporate governance and increased disclosure in other codes.
Despite some of STC's shares being owned by the government, STC strived to develop disclosure in corporate governance. Given this, STC would have taken more positive steps in terms of disclosure. There were also some variations between STC's Arabic and English annual reports. Moreover, STC, like other companies in the list, disclosed data due to CMA's mandate and corporate social responsibility (CSR). Based on Table B.8 of Appendix B, Tawuniya showed corporate governance changes between 2007 and 2009. As seen in Figure 14, Tawuniya focused on corporate governance after 2009. Tawuniya increased word counts for risk management, preparation of financial reports, corporate governance codes, and duties and responsibilities of the audit committee. Clearly, Tawuniya focused on risk management because it is an insurance company. Moreover, Tawuniya did not partake in CSR in 2007 & 2009. It focused more on disclosure based on the mandate and did not participate much in a voluntary disclosure. Based on Table B.9 of Appendix B, Aseer's corporate governance disclosure improved. As shown in Figure 15, Aseer focused on corporate governance after 2009. However, some codes were not mentioned in Asssir 2007 and 2009 annual reports. The word counts for the preparation of financial reports (code 11) and loans, spending, and assets (code 14) increased. Based on Table B.10 of Appendix B and Figure 16, SPIMACO's corporate governance disclosure changed between 2007 and 2009. Aldawaeyah focused on the mandatory disclosure (board of directors code) and increased disclosure of codes 10 to 22. In particular, was a significant increase in corporate governance (code 13). Other codes did not improve due to voluntary disclosure. SPIMACO also has annual reports in English. As seen in Table B.11. of Appendix B and Figure 17, the company focused on CMA's mandate. However, the company's CSR data was higher than other codes. This can be attributed to Zamil Steel being a family-owned business, since disclosure of social activities may satisfy its owners. Zamil Steel's shares were stagnant, mainly because of the family's control over its shares.  Table B.12 of Appendix B and Figure 18, the company disclosed more about its CSR than any other codes. There was an increase in risk management disclosure (code 10) in 2009 which might be due to the credit crunch on the real estate business.
The company's annual reports were in Arabic only, which meant that it did not intend to attract foreign investors. NSCSA showed a significant increase in both mandatory and voluntary disclosure of information. Nearly all codes increased, based on Figure 19 and Table B.13 of Appendix B. SMRG, like most companies in this study, disclosed its board of directors as mandated. It did not participate much in a voluntary disclosure. Based on Table B.14 of Appendix B and Figure 20, it increased disclosure of financial report preparation (code 11), duties, and activities of the board (code 15). The word count increase of spending and assets (code 14) happened because of the higher loan count rather than disclosure increase. As shown in Table B.15 of Appendix B and Figure 21, Shams disclosed mandatory information, but not voluntary information. Codes 11 and 14 were heavily present in its annual reports. Shams did not release English annual reports. Information disclosure level is important because of its link to equity cost (Botosan, 1997), which reflects capital cost (Clarkson et al., 1996). Disclosure levels depend on the country, corporate governance regulations, and investors' behavior (Botosan, 1997).

Impact of opening the stock market on firms' information disclosure
The codes used in this study were based on the CMA codes. The codes are divided into four sections: 1) rights of the shareholders; 2) disclosure and transparency; 3) board of directors; 4) the general section. As mentioned earlier, disclosure can be classified as voluntary or mandatory.   Figure 22. More than 60% of the companies reviewed did this. The disclosure of this code represents an increase in disclosing the boards' activities and meetings.

Code 4: Clear dividends policy
Only two companies in the research sample did not mention this code. The others increased the number of words they allotted for dividends policies.
Code 5: Policies, procedures, and supervisory rules related to disclosure Nearly all companies mentioned the policies, procedures, and supervisory rules related to disclosure. The average word count for this code increased by 10%.
Codes 6-9: Name of the board directors, chairman, and top five executives who receive high compensation; and clear board structure; and Code 26: External auditor's name The majority of companies included in this study disclosed information related to these codes.
Code 10: Risk management procedure The average word count for this code increased by approximately 10%. Only two companies in 2007 and one company in 2009 did not mention this code in their annual reports.
Code 11: Procedure for preparing the financial reports All companies increased the disclosure of procedures in preparing the financial and annual reports by about 10% between 2007 and 2009.

Code 12: Corporate social responsibility
There was an increase in the disclosure of corporate social responsibility. Only four companies did not mention this code. The majority who increased their word counts for code 12 are family businesses or companies with major shares owned by the government.
Code 13: The availability of corporate governance codes The majority of companies mentioned corporate governance codes in their annual reports. However, the level of disclosure remains very low, despite the growth of approximately 10%. Four companies did not mention this code in their annual reports.
Code 14: Loans, spending, and assets of the company All companies disclosed data about loans, spending, and assets in their annual reports. However, the average word count decreased in 2009. This might not be due to a decrease in the disclosure level, but a decrease in the number of loans and spending. The data also shows that disclosure levels depend on different factors: code type, ownership, and business type.
Code type: there were variations between the codes disclosed by companies. Most disclosed codes include information mandatorily required by the CMA. There was minimum disclosure of information voluntarily required by CMA. Furthermore, the majority of companies did not improve their disclosure levels. This showed that they do not think that disclosure is important.
Ownership: ownership also affected information disclosure. Companies with government-owned shares disclosed less information than other companies. However, they disclosed CSR information more than other companies.
Family-owned companies also disclosed CSR-related information more than other codes. Business type: information disclosure level also depends on the business type. For instance, Tawuniya focused on risk management in its annual report, because it is an insurance company.
In essence, Saudi Arabian companies should consider the role disclosure plays in attracting investors.

CONCLUSION
Using a sample of 15 annual reports released by Saudi Arabian companies in 2007 and 2009, this paper examines the effects of stock market liberalization on information disclosure. The annual reports were evaluated through content analysis, which involved counting the number of words relating to some codes and determining the presence of other codes.
The government's mandate to release certain information is also a strong factor in information disclosure.
Based on the 15 companies evaluated, the liberalization of Saudi's stock market increased information disclosure levels.
The liberalization of the stock market meant being open to foreign investments. Thus, companies have to increase their information disclosure levels, especially in terms of releasing annual reports in English, to attract foreign clients.
On the contrary, companies that did not release annual reports in English are at a disadvantage. They would not attract as many foreign investors as their counterparts with released English annual reports. Thus, annual reports should be available in Arabic and English so any investors can evaluate them.
However, there are other factors that contribute to information disclosure levels of Saudi Arabian companies. Improvement of disclosure levels can mean a better understanding of corporate governance codes. Many companies also did it for the sake of following CMA's mandate.
Investors, auditors, and other researchers may find the results of this study beneficial. They can use the results when dealing with firms having low foreign investments and high financial risk. Furthermore, countries that have not opened their stock markets to foreign investors can consider the results of this study to see if stock market liberalization can bring positive effects to them.
Since there are other factors that might have contributed to disclosure levels, researchers can examine these factors, should they want to expand their investigation of the relationship between stock market liberalization.
Other researchers can also study more companies, as this study only analyzed a small number of companies. In addition, companies outside of Saudi Arabia can be studied.
Lastly, researchers can extend their investigations and verify such reporting practices. By doing this, the quality and quantity of information available to the public can be improved.      Code 10: Risk management procedure 169 words: Credit risk: The company seeks to limit its credit risk with respect to customers by setting credit limits for individual customers and by monitoring outstanding receivables. At the balance sheet date, no significant concentrations of credit risk were identified by management. Liquidity risk: The company limits its liquidity risk by ensuring that bank facilities are available. The company's terms of sales require amounts to be paid within 90 to 150 days of the date of sale. Trade payables are normally settled within 60 to 90 days of the date of purchase. Currency risk: As a result of investment in foreign countries, the consolidated balance sheet can be affected by movements in the exchange rate of Saudi Riyals against currencies of these foreign countries. There are transactional currency exposures also. Such exposures arise mainly from sales or purchases by the foreign subsidiaries in currencies of their respective countries, which are not pegged with the functional currency of the parent company.
175 words: Credit risk: The Company seeks to limit its credit risk with respect to customers by setting credit limits for individual customers and by monitoring outstanding receivables. At the balance sheet date, no significant concentrations of credit risk were identified by management. However, the trade receivables from foreign customers are secured by letters of credit. Liquidity risk: The company limits its liquidity risk by ensuring that bank facilities are available. The company's terms of sales require amounts to be paid within 90 to 150 days of the date of sale. Trade payables are normally settled within 60 to 90 days of the date of purchase. Currency risk: As a result of investment in foreign countries, the consolidated balance sheet can be affected by movements in the exchange rate of Saudi Riyals against currencies of these foreign countries.
There are transactional currency exposures also. Such exposures arise mainly from sales or purchases by the foreign subsidiaries in currencies of their respective countries, which are not pegged with the functional currency of the parent company.                  APPENDIX C Board meetings and the outcome of these meetings