Ala'a El Husseini

DBA Graduate - 2017

Thesis title

Investor Protection in the Gulf Cooperative Council Countries: Development of the Anti-Self-Dealing Index since 2003

Supervisor(s)

Christopher Kummer
Purpose The development of capital markets has been shown to be positively and significantly correlated with economic growth. This research builds on studies that found that stronger protective laws for investors encourage the development of financial markets; however, this study considers the strategically important and wealthy region of the Gulf Cooperation Council (GCC), a region omitted in most studies because of its perceived insignificant stock markets. Design/ methodology/ approach This research used the anti-self-dealing index (ASDI) to measure the legal protection of minority shareholders against expropriation by corporate insiders. It also carried out a historically oriented analysis project by using the ASDI to measure the development of anti-self-dealing since 2003. Findings The empirical findings showed that the ASDI scores, more specifically in 2015, are relatively high, compare well with the rest of the world, and had not been stagnant during the study period and had furthermore improved significantly. Research limitations This research received the help of Al Tamimi law firms in order to calculate the ASDI for the 6 GCC countries based on legal rules prevailing in 2003, 2009 and 2015. Despite the fact that the ASDI has been used significantly in the academic research, this research realistically accepts that even the best constructed index simply cannot capture and convey the highly context specific subject of investor protection. Practical implications The findings of this study can assist GCC countries regulators, institutional investors, and the international investment community in understanding the status of investor protection in the GCC region and areas that might need improvement. This research offers to makers of policy valuable recommendations for a long-term solution to the issue of diversification for the growth of their financial markets by offering legal protection that will entice potential investors to increase entrepreneurs’ access to capital markets. The results suggest steps that each country can take to create an environment conducive for investors to participate more actively in the regions’ stock markets. Keywords: Anti-self-dealing-index, Gulf Cooperation Council, corporate governance, investor protection, protective laws