Abstract
The current study evaluated the influence of corporate governance mechanisms (CGM) from 130 banks from 13 Middle East and North Africa (MENA) countries. The goal was to analyze their risk disclosure practices from 2012-2019 and understand the impact of corporate governance (CG) on the level of bank risk disclosure. The current findings reveal a positive association between the level of bank-risk disclosure and 1) the presence of Sharia supervisory board; 2) the ownership of structure at the bank level; and 3) control of corruption at the country-level. The study has implications for developing, implementing, and enforcing governance standards at the corporate and national levels that are relevant to corporate boards, investors, governments, and regulatory authorities.
Highlights
In the global banking sector, risk management, risk disclosure, and good governance structures gained much importance following the 2007/2008 financial crisis (AlHares, Ntim, Al-Hares, & Al Abed, 2018). Nur Probohudono, Tower, and Rusmin (2013) reported that the 2007/2008 crisis was characterized by low levels of risk disclosure
The majority of studies focus on developed countries (American and European), thereby not adding understanding related to Middle East and North Africa (MENA) countries and emerging economies
The results from the multivariate analysis confirmed that corporate governance mechanisms (CGM) explains the differences in the levels of risk disclosure at the bank- and country-level
Summary
In the global banking sector, risk management, risk disclosure, and good governance structures gained much importance following the 2007/2008 financial crisis (AlHares, Ntim, Al-Hares, & Al Abed, 2018). Nur Probohudono, Tower, and Rusmin (2013) reported that the 2007/2008 crisis was characterized by low levels of risk disclosure. In the global banking sector, risk management, risk disclosure, and good governance structures gained much importance following the 2007/2008 financial crisis (AlHares, Ntim, Al-Hares, & Al Abed, 2018). Nur Probohudono, Tower, and Rusmin (2013) reported that the 2007/2008 crisis was characterized by low levels of risk disclosure. When risk disclosure is at a low level there is limited information available. The limited information compromises the economic decision making of external users and their judgments (Cabedo & Tirado, 2004). External users deserve accurate information regarding the risks a firm assumes to generate its value. Very few studies have focused on how risk disclosure affected the firm-level governance structures (Elshandidy & Neri, 2015)
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