Determinants of Corporate Risk Disclosure Practice: The Case of Islamic Banks in Gulf Cooperation Council Region

2018 ◽  
Vol 15 (1) ◽  
pp. 16-38 ◽  
Author(s):  
Samir Srairi
Keyword(s):  
United Arab Emirates ◽  
Composite Index ◽  
Gulf Cooperation Council ◽  
Risk Information ◽  
Rate Of Return ◽  
Islamic Banks ◽  
Risk Disclosure ◽  
Gulf Region ◽  
Corporate Risk ◽  
Level Of Risk

The paper develops a framework to explore the risk disclosure practices of 29 Islamic banks operating in the Gulf Cooperation Council countries over the period of 2013-2016 and examines the potential factors which might be affecting risk disclosure. To analyze the level of risk disclosure, the paper develops a composite index by using the content analysis technique. We also employ OLS technique to examine factors affecting Islamic banks’ risk disclosure. The results indicate a very high difference in risk disclosure between countries. Only two countries, the United Arab Emirates and Bahrain, have a higher level of risk disclosure. The findings also suggest that reporting on some risk disclosure types especially displaced commercial risk and rate of return risk is very low. The regression results show that Islamic banks with a stronger set of corporate governance mechanisms and an active Shariah board appear to disclose more risk information. Other factors that influence risk disclosure practices of Islamic banks are bank size, leverage, cross-border listings and the level of political and civil regression. The study recommends that Islamic banks have to revise their communication strategies and provide more risk information related to rate of return risk and display commercial risk. In addition, GCC regulators should establish risk disclosure regulations which have to become mandatory for all Islamic banks. To the best of our knowledge, the paper provides the first analysis related to the determinants of corporate risk disclosures of Islamic banks in the Arab Gulf region.

scholarly journals The level of risk disclosure in listed banks: Evidence from Saudi Arabia

2016 ◽  
Vol 14 (1) ◽  
pp. 175-194 ◽  
Author(s):  
Abdullah Al-Maghzom ◽  
Khaled Hussainey ◽  
Doaa Aly
Keyword(s):  
Saudi Arabia ◽  
Empirical Analysis ◽  
Risk Information ◽  
Annual Reports ◽  
Islamic Banks ◽  
Risk Disclosure ◽  
Reporting Practices ◽  
The Empirical Analysis ◽  
Practical Implications ◽  
Level Of Risk

This study contributes to the existing risk disclosure literature in emerging economies, in particular Saudi Arabia (SA), by examining the levels of risk disclosure in the annual reports of both Islamic and non-Islamic listed banks. This investigation uses a manual content analysis method to examine all Saudi listed banks from 2009 to 2013. This study also develops two holistic risk disclosure indices to measure the levels of risk disclosure in both Islamic and non-Islamic banks. The empirical analysis shows that Islamic banks report less risk information than non-Islamic banks. However, the analysis also reveals that both Islamic and non-Islamic banks report relatively the same amount of risk information regarding the banks’ universal items. Furthermore, the empirical analysis shows that Islamic banks report very low risk disclosure items. The study’s findings have practical implications. They inform the regulators about the current level of risk disclosure in all Saudi listed banks (Islamic and non-Islamic). For example, the findings show that Islamic banks report less risk information than their non-Islamic counterparts. The practical implications for managers from these findings are that in order to keep investors satisfied, banks with low levels of risk disclosure should enhance their reporting practices. This will help investors when making investment decisions. To the best of the researchers’ knowledge, no prior research has previously been conducted on the levels of risk disclosure in Saudi Arabian listed banks. Therefore, this is the first study to examine the levels of risk disclosure in the context of Saudi Arabia.

Political connection, family ownership and corporate risk disclosure: empirical evidence from Jordan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Malek Hamed Alshirah ◽  
Ahmad Farhan Alshira’h ◽  
Abdalwali Lutfi
Keyword(s):  
The Body ◽  
The Political ◽  
Family Ownership ◽  
Political Connection ◽  
Risk Disclosure ◽  
Moderator Effect ◽  
Content Type ◽  
Negative Effect ◽  
Corporate Risk ◽  
Level Of Risk

Purpose This study aims to empirically examine whether the political connection is related to risk disclosure practices. The study also seeks to contribute to the existent risk disclosure literature by investigating the moderator effect of family ownership on this relationship. Design/methodology/approach The content analysis approach was used to collect data and determine the level of risk disclosure over the non-financial Jordanian firms listed on 1Amman Stock Exchange. The sample of this study contains 376 annual reports over four years from 2014 to 2017. It used the random effect regressions to examine the hypothesis of the study. Findings The results show that politically connected companies disclose less risk information than the unconnected ones in Jordan. The results also refer that family ownership contributes in mitigating the negative effect of the political connection on the level of corporate risk. Practical implications The results have implications for regulatory institutions such as the Jordan Securities Commission to take the negative effect of political connection in their consideration and impose further regulations to monitor this board’s attribute and control politicians’ domination on the board decisions. Originality/value The current study also contributes to the body of literature by investigating the effects of the political connections on the level of risk disclosure in the financial reports. To the best of the authors’ knowledge, the current study is the first to examine the effect of the political connection on the risk disclosure practices. Moreover, the study is among the first studies that examine the moderating role of family ownership on such relationship.

Audit committee’s attributes, overlapping memberships on the audit committee and corporate risk disclosure: Evidence from Jordan

Accounting ◽  
2021 ◽  
pp. 423-440
Author(s):  
Malek Hamed Alshirah ◽  
Ahmad Farhan Alshira’h ◽  
Abdalwali Lutfi
Keyword(s):  
Audit Committee ◽  
Stock Exchange ◽  
Random Effect ◽  
Random Effect Model ◽  
Audit Committees ◽  
Annual Reports ◽  
Risk Disclosure ◽  
Committee Membership ◽  
Corporate Risk ◽  
Level Of Risk

This paper aims to contribute to the literature by examining whether audit committees' attributes affect risk disclosure practiced by Jordanian listed companies. Selecting a sample of 94 Jordanian companies listed on Amman Stock Exchange, the authors carried out a manual content analysis on annual reports to determine the level of risk disclosure. Random effect model was employed in the analysis. Empirical results show that the audit committee size had a positive effect on the level of risk disclosure. However, there was no evidence that the frequency of the audit committee meetings, expertise or overlapping of the audit committee membership were significantly related to the risk disclosure. The findings are important for standard setters to improve their comprehension about the influence of audit committee in disclosing risk information and reconsider the effective monitoring role played by audit committee.

Board of directors' characteristics and corporate risk disclosure: the moderating role of family ownership

2020 ◽  
Vol 15 (2) ◽  
pp. 219-252
Author(s):  
Malek Hamed Alshirah ◽  
Azhar Abdul Rahman ◽  
Ifa Rizad Mustapa
Keyword(s):  
Board Of Directors ◽  
Family Ownership ◽  
Risk Disclosure ◽  
Content Type ◽  
The Board Of Directors ◽  
Corporate Risk ◽  
The Relationship ◽  
Moderating Role ◽  
Level Of Risk

PurposeThis study aims at examining the level of risk of disclosure practices and the effect of four board of directors' characteristics (board size, board meetings, CEO duality and board expertise) on these practices in the Jordanian context. This study also adds to the body of literature by examining the moderating effect of family ownership on the relationship between the board of directors' characteristics and the corporate risk disclosure.Design/methodology/approachThe sample of this study contains the non-financial Jordanian firms listed on Amman Stock Exchange (ASE). 376 annual reports of the sampled firms over four years from 2014 to 2017 were used. The content analysis approach was used to collect data and to determine the level of risk disclosure by computing the number of risk-related sentences in the annual reporting. To test the study's hypothesis, the random effect model was employed.FindingsThe empirical results show that the total of the risk disclosure sentences for each firm ranges from a minimum value of 2 sentences to a maximum value of 61 sentences, and the mean of CRD is 28 sentences. The results also indicate that the board expertise is positively related with the level of risk disclosure. Conversely, CEO duality has a negative impact on the risk disclosure practices. However, the results failed to support that the board size and the board meetings have a significant effect on the level of risk disclosure. Furthermore, the study demonstrated that the family ownership moderates the relationship between the board of directors and the corporate risk disclosure.Practical implicationsThe finding of this study is more likely be useful for many concerned parties, researchers, authorities, investors and financial analysts alike in understanding the current practices of the risk disclosure in Jordan, thus helping them in reconsidering and reviewing the accounting standards and improving the credibility and transparency of the financial reports in the Jordanian capital market.Originality/valueThe current study contributes to the literature of risk disclosure because the previous research has paid little attention to this topic in Jordan. To the best knowledge of the researcher, this study is the first Jordanian study that focuses on examining the relationship between the board of directors' characteristics and the corporate risk disclosure in the non-financial sector. Furthermore, it is the first study that examines the moderating role of family ownership on such relationships. Consequently, the results of the current study draw attention to the CRD practices and the monitoring role of board of directors in Jordan.

scholarly journals The Role of Foreign Directors in Corporate Risk Disclosure: Empirical Evidence From Jordan

2019 ◽  
Vol 10 (4) ◽  
pp. 119
Author(s):  
Malek Hamed Alshirah ◽  
Azhar Abdul Rahman ◽  
Ifa Rizad Mustapa
Keyword(s):  
Resource Dependence ◽  
Random Effect ◽  
Random Effect Model ◽  
Resource Dependence Theory ◽  
Annual Reports ◽  
Risk Disclosure ◽  
Foreign Directors ◽  
Corporate Risk ◽  
Level Of Risk

The current study examined the role of foreign directors in enhancing the level of risk disclosure in the annual reports of Jordanian listed companies. The content analysis method was used to measure the level of risk disclosure by computing the number of risk-related sentences in annual reports. To achieve the study’s objective, random effect model have been applied on a sample of 376 firm-year observations of Jordanian non-financial companies for the period of 2014-2017. The findings are in line with the argument of agency theory and resource dependence theory, which posits that existence of foreign members on the board contributes in increasing the level of risk disclosure. The study aimed to fill the gap in the literature of risk disclosure regarding the relationship between foreign directors and risk disclosure. It is expected that the findings will be useful to researchers, authorities and investors alike in understanding the important role of foreign directors in improving practices of risk disclosure in Jordan.

scholarly journals Financial Performance And Compliance With Basel III Capital Standards: Conventional vs. Islamic Banks

2013 ◽  
Vol 29 (4) ◽  
pp. 1031 ◽  
Author(s):  
Osama M. Al-Hares ◽  
Naser M. AbuGhazaleh ◽  
Ahmed Mohamed El-Galfy
Keyword(s):  
Financial Performance ◽  
United Arab Emirates ◽  
Cross Sections ◽  
Global Financial Crisis ◽  
Gulf Cooperation Council ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
Basel Iii ◽  
Islamic Banks ◽  
Conventional Banks

This study is a commentary on the financialperformance and quality capital of Islamic versus conventional banks currentlyoperating in the Gulf Cooperation Council (GCC) region. In addition toassessing the financial performance of the full set of banks across various GCCcountries, the study is the first toconsider the extent to which Islamic vs.conventional GCC banks comply with the new Basel III requirements of raising betterquality capital. The study uses bank-level data for 75 (55 conventionaland 20 Islamic) banks in Kuwait, United Arab Emirates, Kingdom of Saudi Arabia,Oman, Qatar, and Bahrain. Financial ratios are used tomeasure and compare Islamic vs. conventional banks performances, and weemploy a comprehensive and the most recent sample of data available in the region, consisting of cross-sections from 2003 to 2011.The results reveal that Islamic banks are, onaverage, less efficient but more profitable, more liquid, more solvent (lessrisky), and enjoyed higher internal growth rates than conventional banks during2003-2011. The results indicate that there are statistically significant differencesbetween the two types of banks, as far as profitability, solvency, and internalgrowth rate ratios are concerned; however, there are no statisticallysignificant differences in liquidity and efficiency. The results also indicatethat banks, as a whole, appear to be largely sufficiently capitalized for BaselIII. Gulf Cooperation Council banks are well positioned to absorb higherprovisions and impairment charges given the higher capital adequacy ratiosreported by most. The Common Equity Ratio, Tier 1 Capital Ratio, and Capital AdequacyRatios (CARs), for the majority of banks in 2011, comfortably satisfy theenhanced capital requirements of Basel III. The results show that Islamic bankshave, on average, noticeably higher (and significantly different) capitalratios compared to conventional institutions. With regard to theimpact of the global financial crisis on both types of the banks, the resultsindicate that Islamic banks performed better thanconventional banks during the period 2006-2009, as the former enjoys highercapitalization, higher liquidity reserves, and also maintained stronger growthcompared to conventional banks in almost countries.Findings of this study may be useful for capital-market participants, as the full set of banks across various Gulf Cooperation Councilcountries needs to be examined before any substantive conclusions can bereached about the relative performance of Islamic versus conventional banks.Further, as the full implementation of Basel III requirements will not takeplace until 2019, the results of this study will convey information that shouldencourage banks to consider the earlier implementation of Basel III capitalrequirements in order to provide themselves with a reputational boost, as wellas a competitive advantage.

Drivers of Corporate Risk Disclosure in Indian Non-financial Companies: A Longitudinal Approach

2019 ◽  
Vol 44 (3) ◽  
pp. 303-325
Author(s):  
Ridhima Saggar ◽  
Balwinder Singh
Keyword(s):  
Investment Decision ◽  
Gender Diversity ◽  
Risk Information ◽  
Risk Disclosure ◽  
Theoretical Perspectives ◽  
Panel Data Regression ◽  
Data Regression ◽  
Political Cost ◽  
International Investors ◽  
Corporate Risk

The present study aims to identify the drivers of corporate risk disclosure in the Indian listed non-financial companies over a period of 6 years. A sample of 318 companies from Business Today’s list of top 500 companies has been analyzed using Panel data regression. Multiple theoretical perspectives have been employed such as agency, signaling, stakeholders and political cost theories in explaining the drivers of corporate risk disclosure. The findings provide crucial understanding for the investors, lenders and other prime stakeholders of key drivers of risk disclosure which will assist in the investment decision. The results conclude that corporate governance in the form of large boards, gender diversity in the boardrooms and independent directors on boards are positive drivers of risk information, whereas CEO duality restricts such information which is alarming. Larger, less profitable, low liquid and firms reporting more risk information in the past divulge more information on risk confronted by them. Analogously, the study widens the knowledge in the Indian context which possesses a lot of potentials to attract international investors who are in search of information to demarcate strongly managed companies than their counterparts.

HERITAGE IN THE LIVED ENVIRONMENT OF THE UNITED ARAB EMIRATES AND THE GULF REGION

2017 ◽  
Vol 11 (2) ◽  
pp. 55 ◽  
Author(s):  
Joseph John Hobbs
Keyword(s):  
Built Environment ◽  
United Arab Emirates ◽  
Architectural Design ◽  
Social Sustainability ◽  
Gulf Region ◽  
Planning And Design ◽  
Spatial Features ◽  
Gulf Countries ◽  
The Social ◽  
Islamic Values

This paper examines how the architectural, social, and cultural heritage of the United Arab Emirates and other Gulf countries may contribute to better development of this region’s lived environment. Modern urbanism has largely neglected heritage in architectural design and in social and private spaces, creating inauthentic places that foster a hunger for belongingness in the UAE’s built environment. The paper reviews recent urban developments in the UAE and the Gulf Region, and identifies elements of local heritage that can be incorporated into contemporary planning and design. It proposes that adapting vernacular architectural heritage to the modern built environment should not be the principal goal for heritage-informed design. Instead we may examine the social processes underlying the traditional lived environment, and aim for social sustainability based on the lifeways and preferences of local peoples, especially in kinship and Islamic values. Among the most promising precedents for modern social sustainability are social and spatial features at the scale of the neighborhood in traditional Islamic settlements. Interviews with local Emiratis will also recommend elements of traditional knowledge to modern settings. 

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