Corporate governance mechanisms and corporate risk disclosure: Empirical evidence from Jordan

• Main Author: Al Shira'H, Malek Hamed Mahasen
• Format: Thesis
• Language: English; English; English; English
• Published: 2020
• Subjects: HD58.7 Organizational Behavior.; HD61 Risk Management; HF5667 Professional Ethics. Auditors.
• Online Access: https://etd.uum.edu.my/9493/1/permission%20allow-902210.pdf; https://etd.uum.edu.my/9493/2/s902210_01.pdf; https://etd.uum.edu.my/9493/3/s902210_02.pdf; https://etd.uum.edu.my/9493/4/s902210_references.docx; https://etd.uum.edu.my/9493/

This study aims to examine the relationship between corporate governance mechanisms (board of directors, audit committee and ownership structure) and corporate risk disclosure (CRD). This study also investigates the moderating effect of family ownership on the relationship between the internal corporate governance mechanisms and CRD. The sample of the study consists of 376 annual reports of Jordanian companies during the period of 2014 to 2017. Content analysis approach was used to determine the level of risk disclosure by computing the number of risk related sentences in the annual reports. Random effect model was employed in the analysis. Empirical results show that total risk disclosure sentences range from a minimum of 2 sentences to a maximum of 61 sentences and the mean value of CRD is 28 sentences. The results also indicate that board expertise, foreign directors and audit committee size, are positively related with the level of CRD. Conversely, CEO duality, political connection and family ownership have a negative impact on CRD. Furthermore, the results failed to support that board size, board meetings, audit committee meetings, audit committee expertise, overlapping of audit committee membership, institutional ownership and foreign ownership have a significant effect on the level of risk disclosure. The study has found a significant moderating effect of family ownership on the relationship between internal corporate governance mechanisms and CRD. The current study contributes to the literature by providing a better understanding of the risk disclosure practices among Jordanian listed firms. The results of this study have implications for companies in Jordan to recognize the important role played by corporate governance mechanisms in improving their risk disclosure practices. Furthermore, accounting regulators in Jordan should mandate companies to provide sufficient risk information in their annual reports.