Risk reporting appraisal in post-revolutionary Tunisia

2018 ◽  
Vol 16 (4) ◽  
pp. 522-542 ◽  
Author(s):  
Wael Hemrit
Keyword(s):  
Corporate Governance ◽  
Liquidity Risk ◽  
Operational Risk ◽  
Risk Information ◽  
Risk Disclosure ◽  
Board Size ◽  
Content Type ◽  
Tunisian Revolution ◽  
The Impact ◽  
Risk Reporting

Purpose This paper aims to investigate the determinants of operational and liquidity risk reporting for the Tunisian insurance and banking sectors after the outbreak of the Tunisian revolution on 14 January 2011. Design/methodology/approach A manual content analysis approach was used to measure risk disclosure by counting the number of risk-related words within risk-related sentences in a wide range of publications. Findings The results show that operational risk disclosure is associated positively with operational losses frequency, institution size and the proportion of independent non-executive members of the board of directors. Also, board size is found to be negatively associated with risk disclosure. Moreover, net stable funding ratio, size and proportion of independent non-executive members have a positive effect on liquidity risk disclosure. The authors also discover that infrequency of board meetings and the presence of young members on the board increase the extent of liquidity risk information. Research limitations/implications The research focuses on a small number of observations which somewhat restrict the generalization of results to the entire class of financial sector in Tunisia. Also, the qualitative character of some supposed explanatory variables (frequency and severity of operational risk) relies heavily on the experiences of interviewees and their basic perceptions. Practical implications Investors might do well to rely on such characteristics (large board size, less active board and a high proportion of non-executive directors) to predict the disclosure of risk information, either operational or liquidity risk. Board members should keep an eye on reporting on risk, by promoting the success keys of governance, because good corporate governance has to be recognizable at first to be an effective value driver. Originality/value The findings rationalize the debate over the impact of improved corporate governance on risk disclosure practices within the context of the Tunisian revolution. The logic of this rationalization may help to promote political incentives that will encourage a risk management culture based on a dynamic communication framework.

scholarly journals Gender diversity, corporate governance and financial risk disclosure in the UK

2020 ◽  
Vol 62 (6) ◽  
pp. 521-538 ◽  
Author(s):  
Idris M. Bufarwa ◽  
Ahmed A. Elamer ◽  
Collins G. Ntim ◽  
Aws AlHares
Keyword(s):  
Corporate Governance ◽  
Financial Risk ◽  
Good Practice ◽  
Gender Diversity ◽  
Risk Disclosure ◽  
Board Size ◽  
Content Type ◽  
Industrial Sectors ◽  
The Uk ◽  
The Impact

Purpose This study aims to investigate the impact of corporate governance (CG) mechanisms on financial risk reporting in the UK. Design/methodology/approach The study uses a panel data of 50 non-financial firms belonging to 10 industrial sectors listed on the London Stock Exchange in the period 2011-2015. Multivariate regression techniques are used to examine the relationships. Findings The findings of this study reveal that CG has a significant influence on financial risk disclosure. Specifically, it is found that block ownership and board gender diversity have a positive effect on the level of corporate financial risk disclosure (FRD). While there is no significant relationship between board size and corporate FRD. Research limitations/implications This study has significant implications for policy-makers, investors and regulators. Evidence of growing FRD implies that efforts by several stakeholders have had some positive impact on the level of FRD in the firms examined. Examples of such changes include, namely, increasing board size and gender diversity acting as effective firm level advisors and monitors of FRD. As a consequence, regulators and policymakers should continually pursue reforms to encourage firms to follow CG principles that are promoted as good practice. Originality/value This study adds to the emerging body of literature on CG–risk disclosure relationships in the UK context using content analysis. The study also highlights that gender diversity enhances FRD.

The determinants of internet risk disclosure: empirical study of Egyptian listed companies

2017 ◽  
Vol 32 (8) ◽  
pp. 746-767 ◽  
Author(s):  
Ali Khalil ◽  
Mona Maghraby
Keyword(s):  
Listed Companies ◽  
Ordinary Least Squares ◽  
Risk Information ◽  
The Internet ◽  
Least Squares Regression ◽  
Risk Disclosure ◽  
Content Type ◽  
Reporting Practices ◽  
Board Characteristics ◽  
The Impact

Purpose The purpose of this paper is to contribute to the existing disclosure literature by examining the determinants of corporate risk disclosure (CRD) in the internet reporting for a sample of Egyptian listed companies on the Egyptian Stock Exchange (EGX). Design/methodology/approach This study depends on a sample of 76 Egyptian companies included in the EGX 100 in the period 2012-2014. The study applies a content analysis and uses a sentence-based method to measure CRD in the internet reporting. Ordinary least-squares regression analysis is used to examine the impact of firm and board characteristics on CRD in the internet reporting. Findings The empirical analysis shows that large Egyptian companies tend to disclose more risk information in their internet reporting. Moreover, the results indicate that there is a significant positive association between sector type and CRD in the internet reporting. The results show non-significant association between CRD and other firm characteristics (cross listing and level of risk). Finally, there are no significant associations between CRD and board characteristics variables (board size, board composition and CEO duality). Research limitations/implications The study’s findings have practical implications. It aids in informing policy makers considering implementing new economic reform programs about the properties of Egyptian companies that disclose risk information in their internet reporting. It provides insights on CRD in Egyptian companies for standards setters and professional authorities to improve risk reporting practices to help stakeholders in making good decisions. Originality/value This study is one of the first studies to examine the determinants of CRD in the internet reporting for a sample of Egyptian companies.

The impact of VC backing on the corporate governance of Chinese IPOs

2017 ◽  
Vol 29 (3) ◽  
pp. 330-355 ◽  
Author(s):  
Qing (Sophie) Wang ◽  
Hamish D. Anderson ◽  
Jing Chi
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Independent Directors ◽  
Board Independence ◽  
Board Size ◽  
Content Type ◽  
Shareholder Protection ◽  
Political Ties ◽  
The Impact ◽  
Industry Experience

Purpose The purpose of this paper is to investigate how venture capital (VC) backing influences the board size and independence and how VC backing and board structure impact firm performance in China. Design/methodology/approach Using hand-collected data from 924 initial public offering (IPO) prospectuses covering the period from January 2004 to December 2012, the authors investigate the impact of VC backing on board size, board independence and firm market performance through regression analysis. A two-stage approach is also used to address the endogeneity issue. Findings The authors find robust evidence that VC-backed IPOs have more independent boards, after controlling for CEO and firm characteristics, and the potential endogeneity concerns. Furthermore, firms backed by VCs with management political ties (PTs) have more independent directors with industry relevant expertise than other firms. While no significant relationship is found between board independence and firm performance, the authors present some evidence that IPOs which have a larger percentage of independent directors with industry relevant expertise exhibit higher long-term stock returns, and VCs with management PTs also improve IPO long-run stock performance. Research limitations/implications Although VC is new in China and the Chinese capital market has relative poor corporate governance and weak minority shareholder protection, the authors find support in this paper that VC backing is valuable to IPO firms in China not only through providing funding but also by providing political ties and industry experience. However, Chinese regulatory and institutional settings have strong impact on test results and they change rapidly, so the results may not apply to other period in Chinese markets. Originality/value This paper sheds lights on the influences of VC backing on corporate governance and firm performance in a transitional and emerging economy. It discovers the value of VC investors in a transitional economy as of providing political ties and industry experience. The new definition of independent directors suggested by Suchard (2009) is first used by our paper in the Chinese context.

Nexus between risk disclosure and corporate reputation: a longitudinal approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nischay Arora ◽  
Ridhima Saggar ◽  
Balwinder Singh
Keyword(s):  
Corporate Reputation ◽  
Market Value ◽  
Risk Information ◽  
Future Research ◽  
Risk Disclosure ◽  
Total Risk ◽  
Content Type ◽  
Book Value ◽  
Market Capitalization ◽  
The Impact

PurposeThe study aims to explore the unexplored domain by examining the impact of risk disclosure on corporate reputation in an emerging economy, like India, characterized by huge information asymmetry and uncertainty.Design/methodology/approachIn total two measures of corporate reputation, i.e. market capitalization and excess of market value over book value have been deployed to measure reputation. Automated content analysis has been executed to measure the extent of total risk disclosure. The empirical analysis is premised on a sample of S&P BSE-100 index spanning over the period of ten years from 2009–2010 to 2018–2019; which eventually gets reduced to 58 nonfinancial firms. In order to unearth the risk–reputation relationship, a panel regression technique has been employed.FindingsThe main findings unmask that corporate risk disclosure has a positive bearing on corporate reputation. Substantiating legitimacy theory, its alternative measures like market capitalization and excess of market value over book value divulged to positively influence corporate reputation.Research limitations/implicationsThe study has certain limitations: since there is no standard method of measuring reputation, the results may vary subject to the changes in proxies of corporate reputation. The study also analyzed S&P BSE 100 index in India, and future research needs to approach a larger sample and in other emerging economies to fill up enough empirical evidence in this domain.Practical implicationsThe findings provide insight into the managers on making higher divulgence of material risk information for augmenting corporate reputation. In other words, it indirectly propels the firm to exhibit higher risk information for building reputational capital. From the investor's standpoint, they should admire such firms which dispel more risk information and should have positive outlook toward them, which in turn prompts them to disclose more risks.Originality/valueThis study is unique as it is the first longitudinal study examining the impact of risk disclosure on corporate reputation in Indian settings. It, thus, assists in furthering the risk disclosure literature where there is hardly any study that comprehensively looks into risk–reputation liaison among Indian nonfinancial companies.

scholarly journals Determinants and impacts of risk disclosure quality: evidence from China

2018 ◽  
Vol 19 (4) ◽  
pp. 518-536 ◽  
Author(s):  
Tamer Elshandidy ◽  
Lorenzo Neri ◽  
Yingxi Guo
Keyword(s):  
Content Analysis ◽  
Ordinary Least Squares ◽  
Market Liquidity ◽  
Risk Disclosure ◽  
Disclosure Quality ◽  
Content Type ◽  
Financial Firms ◽  
The Impact ◽  
Risk Reporting

PurposeFew studies have focused on emerging markets owing to difficulties in identifying the real effect of disclosures on these economies. To fill this gap, the purpose of this paper is to first: investigate the main drivers for risk disclosure quality for Chinese financial firms, second: further study the impact of such disclosure on market liquidity.Design/methodology/approachThe sample comprises all financial firms listed in the Shanghai A-shares market for the period 2013–2015. By relying on manual content analysis of annual reports, the risk disclosure quality is measured through a multidimensional approach which encompasses three factors: quantity of disclosure, coverage of disclosure and the semantic properties of depth and outlook. The findings of this paper are based on ordinary least squares and fixed-effects estimations.FindingsThe findings suggest that firm characteristics (especially size) influence risk disclosure practices of Chinese financial companies. Furthermore, the authors found that risk disclosure quality has an impact on market liquidity, and when the authors analysed each year the authors noticed that the results were driven by the year 2013; moreover, the authors noticed no or little significance from the period of the emerging financial crisis.Research limitations/implicationsThe sample of this paper is limited to financial firms in China. The usage of manual content analysis limits the authors’ ability to investigate risk reporting drivers and its impact on market liquidity on a large scale.Practical implicationsThe importance of this paper stems from documenting several reporting incentives concerning not only firms’ quantity, but also firms’ quality of risk reporting. Collectively, the findings support activism for reforms and the enhancement of regulations in China in order to make the market more efficient.Originality/valueThis paper provides new evidence for financial companies in China on the principal drivers for risk disclosure quality and highlights how the quality of such disclosure impacts market liquidity. Furthermore, this paper confirms previous findings on the Chinese market (Ball et al., 2000; Zou and Adams, 2008) in which, given a decreasing but still strong state presence, there is higher stock volatility and weak corporate governance.

scholarly journals Corporate governance and voluntary risk and forward-looking disclosures

2018 ◽  
Vol 19 (4) ◽  
pp. 592-607 ◽  
Author(s):  
Mohammed M. Elgammal ◽  
Khaled Hussainey ◽  
Fatma Ahmed
Keyword(s):  
Corporate Governance ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Annual Reports ◽  
Board Size ◽  
Content Type ◽  
Board Characteristics ◽  
Panel Regressions ◽  
The Impact ◽  
Forward Looking

PurposeThe purpose of this paper is to examine the impact of corporate governance on risk and forward-looking disclosures in Qatar.Design/methodology/approachThe authors automatically measure levels of risk and forward-looking disclosures in the annual reports of Qatari firms for the period 2008–2014. The authors also use two ways clustered error pooled panel regressions to examine the determinants of these disclosures.FindingsThe authors find that firms with a higher percentage of foreign ownership disclose more forward-looking information; conversely, board size has a negative impact on the forward-looking disclosure. Financial firms tend to disclose less forward-looking information, however, they tend to disclose more forward-looking information after the 2008 global financial crisis. The authors also find negative relationships between the risk disclosure and both the number of non-executive members of the board of directors and duality role of the CEO.Research limitations/implicationsThe study uses the quantity of disclosure as a proxy for the quality of disclosure.Practical implicationsThe findings should help the users of corporate annual reports in Qatar to understand managerial incentives for reporting risk and forward-looking information. This should help regulators to set a proper set of disclosure rules. Moreover, this study increases our understanding of the behavior of international investors and the board characteristics (i.e. board size) in motivating risk and forward-looking disclosures in Qatari firms.Originality/valueThe authors provide the original empirical evidence on the impact of corporate ownership and board characteristics on risk and forward-looking disclosures for Qatari firms using two ways clustered error pooled panel regressions.

scholarly journals Does internal corporate governance mechanism control firm risk? Evidence from Indonesia’s three high-risk sectors

2019 ◽  
Vol 19 (6) ◽  
pp. 1362-1376
Author(s):  
Saarce Elsye Hatane ◽  
Stellania Supangat ◽  
Josua Tarigan ◽  
Ferry Jie
Keyword(s):  
Corporate Governance ◽  
Idiosyncratic Risk ◽  
Board Independence ◽  
Total Risk ◽  
Firm Risk ◽  
Board Size ◽  
Content Type ◽  
Asset Return ◽  
The Impact ◽  
Board Ownership

Purpose This study aims to examine the control of corporate governance towards firm risks for a sample of Indonesian firms in agriculture, mining and property industries. This study highlights the impact of four indicators of internal mechanism of corporate governance, i.e. board size, board independence, board gender and board ownership, on three measurements of firm risks, i.e. total risk, asset return risk and idiosyncratic risk. Design/methodology/approach Panel data analysis is conducted using a sample of 62 companies of agriculture, mining and property industries listed in Indonesia Stock Exchange from 2013 to 2017. Pooled ordinary least square with hetero-corrected is the statistical approach conducted to test the hypotheses. Findings The result indicates that board size and board gender insignificantly influence firm risks. While board independence gives varied impacts towards firm risks, it gives positive influence towards total asset return risk, insignificant towards idiosyncratic risk and negative towards total risk. Other interesting results are found in board ownership that has insignificant influence on asset return risk and negative influence on idiosyncratic and total risk. Research limitations/implications Firms should incorporate corporate governance, especially the impactful roles of board independence and board ownership as they serve as tools in reducing firm risk. Moreover, investors may have a better understanding of corporate governance and factors that are influencing firm risks. Therefore, this study can assist them to make the right investment decision. Originality/value This study is notably the first to use comprehensively three measurements of firm risks in Indonesia. Risks can come from internal and external, thus the company should understand the various types of risks facing the company. Total risk measures both the internal and external risks, while asset return risk gives another perspective using overall market perception about the equity and assets of the company. Finally, this study also measures internal risk, which is the only risk that can be controlled and minimised by the board of the company.

Corporate governance and risk reporting: Indian evidence

2017 ◽  
Vol 32 (4/5) ◽  
pp. 378-405 ◽  
Author(s):  
Ridhima Saggar ◽  
Balwinder Singh
Keyword(s):  
Corporate Governance ◽  
Listed Companies ◽  
Risk Information ◽  
Ownership Concentration ◽  
Regulatory Regime ◽  
Risk Disclosure ◽  
Firm Level ◽  
Content Type ◽  
Board Characteristics ◽  
The Relationship

Purpose This study aims to measure the extent of voluntary risk disclosure and examine the relationship between corporate governance firm level quality in the form of board characteristics and ownership concentration’s impact on risk disclosure in the annual reports of Indian listed companies. Design/methodology/approach The method adopted in this study is automated content analysis, which is applied to a sample of 100 listed Indian non-financial companies to find out the extent of risk disclosure. Further, multiple linear regressions have been applied to find out the relationship between corporate governance firm level quality in the form of board characteristics, ownership concentration and risk disclosure. Findings The findings reveal that the total number of positive risk keywords surpasses negative risk keywords disclosure. The corporate governance mainsprings, namely, board size and gender diversity have a positively significant effect on risk disclosure, whereas ownership concentration in the hands of the largest shareholder insignificantly affects risk disclosure, but identity of the largest shareholder having ownership concentration negatively affects disclosure of risk information in the case of Indian promoter body corporate, foreign promoter body corporate and non-institutions in comparison to family ownership. Research limitations/implications This study relied on a set of 39 risk keywords for measuring the extent of risk disclosure. Further, it uses a sample of 100 companies to examine the effect of corporate governance on risk disclosure at one point of time. However, a longitudinal study can help in understanding risk disclosure adopted by Indian listed companies in a better manner. Practical implications The findings have implications for regulatory bodies such as the Securities and Exchange Board of India, which needs to strengthen corporate governance norms with respect to board characteristics and keep a check on ownership concentration for improving risk disclosure by companies. Originality/value To best of the authors’ knowledge, this study is a preliminary attempt linking two research lines in India, that is, corporate risk disclosure and corporate governance quality in the form of board characteristics and ownership concentration. The study identifies corporate governance firm level qualities which lead to divulgation of risk information by the companies pointing towards strengthening of regulatory regime in the country for improved corporate governance regulations adopted by listed companies.

The impact of operational risk incidents and moderating influence of corporate governance on credit risk and firm performance

2019 ◽  
Vol 27 (1) ◽  
pp. 96-110 ◽  
Author(s):  
Chiungfeng Ko ◽  
Picheng Lee ◽  
Asokan Anandarajan
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Credit Risk ◽  
Operational Risk ◽  
Board Members ◽  
Content Type ◽  
Corporate Credit ◽  
Credit Default ◽  
Independent Variable ◽  
The Impact

Purpose The purpose of this paper is to examine the association among operational risk incidents, corporate governance, credit risk and firm performance. Design/methodology/approach First, the authors regress corporate credit risk on the incurrence of operating losses (driven by operational risk events) and corporate governance variables. The purpose is to test the correlation between operational risk, corporate governance and credit risk. Second, in the authors’ next regression, the authors’ dependent variable is firm performance, and the independent variable is operational risk and corporate governance to test the correlation between operational risk, corporate governance and firm performance. In this study, the authors measure corporate governance using four surrogates, focusing on CEO duality, extent of independent board members, extent of foreign ownership and board member presence ratio. Findings The authors’ findings indicate that the higher level of operational risk incidents is linked to higher likelihood of credit default and to poorer performance. More importantly, the authors find that higher-quality corporate governance is associated with lower levels of operational risk incidents, better performance and lower likelihood of credit fault. Originality/value The authors use a rigid theoretical and empirical framework to examine the association among the incidents of operational risk, credit risk, corporate governance and firm performance. The authors’ study is important because it first facilitates understanding of causes leading to operational risk, and second if and how greater financial effects of operational risk negatively influences operating performance and credit risk of nonfinancial institutions in emerging markets.

Does the corruption perception level of a country affect listed firms’ IFRS 7 risk disclosure compliance?

2017 ◽  
Vol 17 (4) ◽  
pp. 727-747 ◽  
Author(s):  
Ben Kwame Agyei-Mensah
Keyword(s):  
Corporate Governance ◽  
Sub Saharan Africa ◽  
Risk Disclosure ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Content Type ◽  
Listed Firms ◽  
Ifrs 7 ◽  
Sub Saharan ◽  
The Impact

Purpose This paper aims to examine the relationship between corporate governance, corruption and compliance with International Financial Reporting Standard (IFRS 7) risk disclosure requirements in listed firms in two Sub-Saharan Africa countries: Botswana and Ghana. This study tries to test whether the transparency level of a country has any impact on the transparency level of its firms. Design/methodology/approach The study uses 174 firm-year observations between the period 2013-2015 for listed firms in the two countries. Each annual report was individually examined and coded to obtain the disclosure of corporate risk disclosure index. Descriptive analysis was performed to provide the background statistics of the variables examined. This was followed by regression analysis, which forms the main data analysis. Findings The results suggest that the extent of risk disclosure compliance over the three-year period is, on average, 63 and 53 per cent for Botswana and Ghana, respectively. The differences in the disclosure levels in the two countries can be attributed to the different levels of corruption in the two countries. One way of hiding corrupt practices is for companies to disclose scanty information. Originality/value This is one of the few studies in Sub-Saharan Africa that tests the transparency levels of listed firms in the two countries by considering the impact of corporate governance factors on IFRS 7 risk disclosure compliance. The findings of this study will help market regulators in Ghana, Botswana, the Sub-Saharan Africa Security and Exchange Commission (SEC) and the Sub-Saharan Africa exchanges in evaluating the adequacy of the current disclosure regulations in their countries.

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