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.

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.

Attributes of Corporate Risk Disclosure: An International Investigation in the Manufacturing Sector

2011 ◽  
Vol 10 (2) ◽  
pp. 1-22 ◽  
Author(s):  
Michael Dobler ◽  
Kaouthar Lajili ◽  
Daniel Zéghal
Keyword(s):  
Financial Risk ◽  
Manufacturing Sector ◽  
Annual Reports ◽  
Risk Disclosure ◽  
Firm Risk ◽  
The North ◽  
Disclosure Incentives ◽  
Corporate Risk ◽  
Risk Categories

ABSTRACT This paper is the first multi-country investigation of comprehensive corporate risk disclosure. Based on a detailed content analysis of 160 annual reports, we analyze the attributes and the quantity of risk disclosure and its association with the level of firm risk in the U.S., Canadian, U.K., and German settings. We find a consistent pattern where risk disclosure is most prevalent in management reports, concentrates on financial risk categories, and comprises little quantitative and forward-looking disclosure across sample countries. In terms of risk disclosure quantity, U.S. firms generally dominate, followed by German firms. Cross-country variation in risk disclosure attributes can only partly be linked to domestic disclosure regulation, suggesting that risk disclosure incentives play an important role. While risk disclosure quantity appears to be positively associated with proxies of firm risk in the North American settings, we find a negative association with leverage for Germany. This coincides with a “concealing motive” implied by an insider role of banks in the German financial setting.

scholarly journals Determinants of Audit Committees Effectiveness in Enhancing Compliance With Regulations: Evidence From Saudi Context

2018 ◽  
Vol 8 (4) ◽  
pp. 438
Author(s):  
Ali A. Alnodel
Keyword(s):  
Audit Committee ◽  
Resource Dependence ◽  
Listed Companies ◽  
Resource Dependence Theory ◽  
Audit Committees ◽  
Annual Reports ◽  
Financial Expertise ◽  
Dependence Theory ◽  
Governance Practices

This paper aims to investigate how effective audit committees are in ensuring compliance with regulations in the Saudi context. Particularly, it examines whether there is an association between the value of fines imposed by the Saudi Capital Market Authority (CMA) and the size, frequency of meeting, and the financial expertise of the audit committee. Other variables have also been incorporated to control for possible effects, particularly size, leverage, ROA, age of the company, and year of fines. Data has been collected from the archives of CMA and from the annual reports of listed companies from 2014 to 2016. In total, 360 year-observations relating to 120 non-financial listed companies were analyzed among which 95 fines and actions imposed by CMA. The results suggest that the size and financial expertise of the audit committee and the leverage of the company and years of fines have significant association with the value of the fines imposed by CMA. In contrast, the regression analysis does not show significant association between the frequency of meeting of the audit committee and other controlled variables on the value of the fines imposed by CMA. These results suggest that the availability of resources to the audit committee, as suggested by the resource dependence theory, has a significant impact on its effectiveness. Regulators and companies could benefit from these findings to enhance compliance with regulations and to improve the role of audit committees. Moreover, these findings could be valuable to strengthen corporate governance practices in similar emerging markets.

scholarly journals Board Diversity and Its Effects on Firm Performance and Risk: A Study in Banking Firms

2021 ◽  
Vol 22 (1) ◽  
pp. proofreading
Author(s):  
Maulida Nurul Innayah ◽  
Bima Cinintya Pratama
Keyword(s):  
Firm Performance ◽  
Resource Dependence ◽  
Random Effect ◽  
Resource Dependence Theory ◽  
Annual Reports ◽  
Board Diversity ◽  
Capital Theory ◽  
Final Sample ◽  
Effect Regression ◽  
Negative Effect

This study examines the effect of board diversity on firm performance and risk in banking firms. The data used in this study was obtained from Bloomberg and OSIRIS database and also firm’s annual reports during 2014-2018 and conducted on banking firms in Indonesia. The final sample used in this study consists of a total of 160 observations. This study uses panel data regression model analysis, ie. fixed effect regression and random effect regression. The results showed that woman director has a positive effect on performance. This results are consistent with resource dependence theory and human capital theory which states that a more diverse board will provide more valuable resources, which can result in better firm performance. The results also showed that woman director have a negative effect on risk because woman director can correct bias in important decisions. Otherwise, based on the research data, the small number of foreign directors make their existence have no effect on performance and risk.

scholarly journals The Impact of Board Characteristics on the Financial Performance of Tanzanian Firms.

2016 ◽  
Author(s):  
◽  
Modest Assenga
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Resource Dependence ◽  
Resource Dependence Theory ◽  
Annual Reports ◽  
Outside Directors ◽  
Board Characteristics ◽  
Dependence Theory ◽  
Foreign Directors ◽  
The Impact

This study investigates the impact of board characteristics on the financial performance of listed Tanzanian firms. The study uses two theories of corporate governance to test the hypothesised relationships between board characteristics and financial performance. These are: namely, agency theory; and resource dependence theory and are complemented through the use of a stewardship theory. The study seeks to investigate the impact of the following variables on financial performance i) independent outside directors; ii) board size; iii) CEO duality; and iv) the board diversity aspects of gender, foreign directors and board skill. The study uses a mixed methods approach and applies a convergent parallel design (Creswell & Plano Clark, 2011), collecting quantitative data from annual reports and qualitative data from semi-structured interviews with 12 key stakeholders in corporate governance. Quantitatively, the study examines the balanced panel data of 80 firm-years observations (2006-2013) from the annual reports of 10 Tanzanian listed firms. The findings partially support agency theory since CEO duality was related with a reduction in financial performance. However, the findings do not support a relationship between the proportion of outside directors on boards and financial performance. The study provides some support for aspects of resource dependence theory, since the findings suggest that there is a positive link between gender diversity and financial performance. However, board size, board skill and foreign directors were not found to have a significant impact on financial performance. Furthermore, the interview findings provide some explanations of the relationships between board characteristics and financial performance by suggesting that the impact depends largely on the independence and proficiency of the individual directors on a firm’s board. The study contributes to the understanding of relationships between board characteristics and financial performance. The study uses, for the first time in this kind of research, Tanzanian data and the underutilised approach of mixed methods to corporate governance research. The study provides academic evidence for Tanzanian policy makers in relation to current and future governance reforms.

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.

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.

scholarly journals CORPORATE RISK DISCLOSURE: THE EFFECT OF CORPORATE GOVERNANCE

2021 ◽  
Vol 5 (1) ◽  
pp. 101-113
Author(s):  
Arisona Ahmad ◽  
Muhammad Muhammad ◽  
Dwi Narullia
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Stock Exchange ◽  
Company Size ◽  
Business Risk ◽  
Risk Disclosure ◽  
Initial Hypothesis ◽  
Corporate Risk ◽  
Corporate Business

ABSTRACT This research investigates the role of corporate governance on the disclosure of corporate business risk management with leverage and company size as control variables. Research data were taken from a company that classified as LQ 45 on the Indonesian stock exchange from 2015 to 2018. This research finds that disclosure of business risk management as a sign that management has managed the company with the good attitude increases along with increased corporate governance activities. Leverage and company size also affect company policies regarding the disclosure of corporate business risks. Overall, the results of this study are consistent with the assumption that corporate governance affects company policies regarding business risk disclosure. However, in contrast to the initial hypothesis, the composition of the board commissioners reduces the risk management disclosure activity in the company. This is because the board of commissioners considers that business risk disclosure can increase costs and reduce its competitive advantage so that investors will respond negatively. Apart from these variables, this study contributes to agency theory, where the findings of this study indicate the confirmation of the application of theory in the context of this study. ABSTRAK Penelitian ini menyelidiki peran tata kelola perusahaan terhadap pengungkapan manajemen risiko bisnis perusahaan dengan leverage dan size perusahaan sebagai variable control. Data penelitian meliputi perusahaan yang tergolong LQ 45 di bursa efek Indonesia dari tahun 2015 hingga 2018. Penelitian ini menemukan bahwa pengungkapan manajemen risiko bisnis sebagai tanda bahwa manajemen telah berperilaku baik dalam mengelola perusahaan meningkat seiring dengan peningkatan aktivitas tata Kelola perusahaan. Leverage dan ukuran perusahaan juga mempengaruhi kebijakan perusahaan mengenai pengungkapan risiko bisnis perusahaan. Secara keseluruhan, hasil penelitian ini konsisten dengan dugaan bahwa tata kelola perusahaan mempengaruhi kebijakan perusahaan mengenai pengungkapan risiko bisnis. Namun, berbeda dengan hipotesis awal komposisi dewan komisaris menurunkan aktivitas pengungkapan manajemen risiko diperusahaan. Hal ini dikarenakan dewan komisaris menimbang bahwa pengungkapan risiko bisnis dapat meningkatkan biaya serta menurunkan keunggulan kompetitif perusahaan sehingga akan direspon negatif oleh investor. Selain variabel tersebut, penelitian ini berkontribusi pada teori agensi dimana temuan yang ada menunjukkan konfirmasi dari penerapan teori di dalam konteks penelitian.

scholarly journals Reverse resource exchanges in service supply chains: the case of returnable transport packaging

2016 ◽  
Vol 21 (3) ◽  
pp. 381-397 ◽  
Author(s):  
Kostas Selviaridis ◽  
Aristides Matopoulos ◽  
Leslie Thomas Szamosi ◽  
Alexandros Psychogios
Keyword(s):  
Resource Dependence ◽  
Single Case ◽  
Resource Dependence Theory ◽  
Third Party ◽  
Content Type ◽  
Contractual Governance ◽  
Contractual Agreements ◽  
Service Supply Chains

Purpose The purpose of this paper is to understand how reverse resource exchanges and resource dependencies are managed in the service supply chain (SSC) of returnable transport packaging (RTP). Design/methodology/approach A single case study was conducted in the context of automotive logistics focusing on the RTP SSC. Data were collected through 16 interviews, primarily with managers of a logistics service provider (LSP) and document analysis of contractual agreements with key customers of the packaging service. Findings Resource dependencies among actors in the SSC result from the importance of the RTP for the customer’s production processes, the competition among users for RTP and the negative implications of the temporary unavailability of RTP for customers and the LSP (in terms of service performance). Amongst other things, the LSP is dependent on its customers and third-party users (e.g. the customer’s suppliers) for the timely return of package resources. The role of inter-firm integration and collaboration, formal contracts as well as customers’ power and influence over third-party RTP users are stressed as key mechanisms for managing LSP’s resource dependencies. Research limitations/implications A resource dependence theory (RDT) lens is used to analyse how reverse resource exchanges and associated resource dependencies in SSCs are managed, thus complementing the existing SSC literature emphasising the bi-directionality of resource flows. The study also extends the recent SSC literature stressing the role of contracting by empirically demonstrating how formal contracts can be mobilised to explicate resource dependencies and to specify, and regulate, reverse exchanges in the SSC. Practical implications The research suggests that logistics providers can effectively manage their resource dependencies and regulate reverse exchanges in the SSC by deploying contractual governance mechanisms and leveraging their customers’ influence over third-party RTP users. Originality/value The study is novel in its application of RDT, which enhances our understanding of the management of reverse exchanges and resource dependencies in SSCs.

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