Corporate governance is no longer a limited regulatory concept or a formal requirement imposed by regulations, but has become one of the most important elements of building trust in markets and protecting capital. The broader the investor base and the more diverse stakeholder interests, the greater the need for effective governance that does not merely rely on texts, but manifests in decisions, accountability, and protection of rights.

Protecting small investors is not a marginal issue, nor an emotional demand raised only when crises occur; it is an essential part of market fairness, efficiency, and sustainability. The financial market is not based solely on large investors or major financial institutions, but also on the trust of thousands of individual investors who invest their savings hoping for a fair return, a disciplined investment environment, and reliable financial information to help them make rational decisions.

When a small investor feels that their protection is not guaranteed, or that financial statements may not reflect reality, or that some key decisions are made for the benefit of specific parties at the expense of other shareholders, the market gradually loses one of its most important foundations: trust. When trust weakens, investment behavior shifts from long-term investment to short-term speculation, from data-driven financial analysis to decisions governed by fear, rumors, and quick reactions.

This not only harms individual portfolios but also affects market efficiency and its ability to channel capital toward the highest quality and most sustainable companies.

Weak governance does not only harm shareholders but extends its impact to the entire national economy. An economy seeking to attract local and foreign investments needs credible listed companies, reliable financial markets, independent boards of directors, and effective accountability mechanisms. Whether local or foreign, the investor is not only looking for investment opportunities but also for an environment that protects capital, prevents conflicts of interest, ensures fair disclosure, penalizes misconduct, and affirms that the market does not discriminate between large and small investors.

From this perspective, governance issues that emerge from time to time should not be seen as isolated violations or transient events, but must be treated as reform indicators revealing weaknesses within the system. They show where gaps exist, where oversight is lacking, where committees become a form without substance, and where the institutional culture fails to protect the company from within before regulatory bodies intervene from outside.

Most importantly, these issues remind us that governance is not the sole responsibility of the regulatory authority. No matter how efficient regulatory bodies are in monitoring, investigating, and imposing penalties, they cannot replace a strong board of directors, an effective audit committee, an honest executive management, or an internal culture that respects disclosure and accountability. External regulatory oversight is important, but it often remains curative. The real preventive role begins within the company itself.

A board of directors that waits for regulatory intervention to identify a problem has not fulfilled its role properly. An audit committee that only asks difficult questions after a problem arises has not been sufficiently effective. An executive management that treats disclosure as a formal obligation rather than a fundamental right of shareholders exposes the company and the market to risks that go beyond regulatory violations to the loss of trust, reputation, and value.

Therefore, developing corporate governance in the local environment requires moving from the stage of formal compliance to the stage of true effectiveness. It is not enough for a company to have an internal governance charter; we need to know how it is applied. It is not enough to have independent members on the board; we must test their independence in key decisions. It is not enough for the audit committee to hold periodic meetings; we must know the quality of the questions it asks, the reports it requests, the risks it monitors, and the observations it insists on addressing.

It is also important to reconsider the criteria for selecting board members. Listed companies need boards capable of understanding economic transformations, financial, technical, and regulatory risks, disclosure requirements, and investor expectations. They also need members who have the ability to read numbers, not merely listen to executive management presentations. And above all, they need members who recognize that their responsibility is not only to those who nominated them, but to the company, all shareholders, the market, and the national economy.

Strengthening the role of internal audit has become a necessity, not an option. A strong internal audit serves as the board's eyes within the company and helps detect problems early before they turn into a crisis. However, it cannot perform this role if it is not independent, or if it is not functionally linked to an effective audit committee, or if its reports are treated as administrative notes that can be postponed or ignored.

The national ambitions to make the Saudi economy an investment-attractive economy and an influential financial center require a higher level of seriousness in implementing governance. Markets do not grow only by increasing the number of listed companies, nor by rising liquidity, nor by expanding investment products; they grow when investors trust that there are fair rules, genuine accountability, effective protection, and reliable disclosure.

In the end, governance is no longer a cosmetic option, nor a line item in the annual report, nor just a regulatory obligation. Governance has become a condition for maintaining trust, protecting capital, enhancing market reputation, and serving the national economy. Companies that do not realize this early may discover too late that the cost of weak governance does not stop at fines or resignations, but extends to reputation, market value, and shareholder rights.

True governance starts from within: from a board that asks questions, an audit committee that scrutinizes, an executive management that discloses, and owners who understand that the listed company is no longer a closed private property, but a public responsibility open to the market, society, and the economy.

Academic specialized in corporate governance