Abstract
ABSTRACTThis study examines the impact of multi-layer governance mechanisms on the level of bank risk disclosure. Using a large dataset from 14 Middle East and North Africa (MENA) countries over a period of 8 years, our findings are three-fold. First, our results suggest that the presence of a Sharia supervisory board is positively associated with the level of risk disclosure. Second and at the bank-level, we find that ownership structures have a positive effect on the level of risk disclosure. At the country-level, our evidence suggests that control of corruption has a positive effect on the level of bank risk disclosure. Our study is, therefore, a major departure from much of the existing accounting literature that offers new crucial insights that show that firms’ disclosure choices are not mainly shaped by firm-level (internal) governance arrangements, but also country-level (external) governance and religious factors. Our findings have important implications for corporate boards, investors, regulatory authorities, standards-setters and governments relating to the development, implementation and enforcement of corporate and national governance standards.
Highlights
The 2007/2008 financial crisis has increased the importance of risk management and disclosure, as well as good governance structures in the banking sector worldwide ( Alnabsha et al, 2018; Abdallah et al, 2015; Aebi et al, 2012; Barakat & Hussainey, 2013; Elmagrhi et al, 2018; Ntim, 2016; Walker Review, 2009)
To the weighted disclosure index score and the supervisory board (SSB), demonstrating that the 2007/08 global financial crisis has changed the focus of risk disclosure and SSB in Middle East and North Africa (MENA) banks
A number of past studies have examined the antecedents of corporate risk disclosures, a closer examination of this literature reveals several limitations
Summary
The 2007/2008 financial crisis has increased the importance of risk management and disclosure, as well as good governance structures in the banking sector worldwide ( Alnabsha et al, 2018; Abdallah et al, 2015; Aebi et al, 2012; Barakat & Hussainey, 2013; Elmagrhi et al, 2018; Ntim, 2016; Walker Review, 2009). Despite the growing importance of this topic, studies examining the impact of firm-level governance structures on risk disclosure are generally rare (Barakat & Hussainey, 2013; Elshandidy et al, 2013; Elshandidy & Neri, 2015; Ntim et al, 2013), especially in the banking sector of emerging market countries, such as those in the Middle East and North Africa (MENA1) region.
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